Use of Net Book Value (NBV) in Valuing Investment in Operating

question 149

Multiple Choice

Use of net book value (NBV) in valuing investment in operating plant assets for investment centers, in contrast to using an estimate of current value, will:

• A) Have no appreciable effect on ROI in most situations.
• B) Have no appreciable effect on plant asset book value.
• C) Have no appreciable effect on operating income reported by the investment centers.
• D) Usually understate ROI.
• E) Usually overstate ROI.

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Definitions:

Ad Valorem Duty

A type of tax applied on the value of an item, commonly used in the context of customs duties on imported goods.

Country A

A placeholder name often used to denote a hypothetical or undisclosed nation in discussions or examples.

Australian Dollars

The recognized monetary unit of Australia, denoted by the abbreviation AUD.

Global Concerns

Issues that affect the international community, encompassing a wide range of topics including environmental, political, economic, and social issues.