How Would the Deprival Value of an Asset Be Determined

question 21

Multiple Choice

How would the deprival value of an asset be determined?

• A) It is the net selling price except where the value to the business (present value) is less or the current replacement cost greater.
• B) It is the present value of the future cash flows to be generated by the asset except where the current replacement cost or net selling price is less than that value.
• C) It is the value to the business of the asset (present value) within the bounds that this value is not less than the net selling price or greater than its current replacement cost.
• D) It is the current replacement cost where the present value is less than the current replacement cost and greater than the net selling price.

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Definitions:

Annually Compounded

Interest on an investment or loan calculated once per year, including interest on the initial amount and all previously accumulated interest.

Effective Rate

The actual interest rate of an investment or loan when compounding interest is taken into account, differing from the nominal rate by including the effects of compounding.

Financial Position

A snapshot of the resources, obligations, and the net worth of an individual or organization at a specific point in time.

Nominal Rate

The stated interest rate of a loan or investment, not taking into account the effect of compounding.