Using a 'Net Basis' Means That the Proceeds from the Disposal

question 57

Multiple Choice

Using a 'net basis' means that the proceeds from the disposal of a depreciable asset should not be separately treated as:

• A) revenue.
• B) gain.
• C) income.
• D) loss.

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Definitions:

Internal Rate of Return

A financial metric used to gauge the profitability of potential investments.

NPV

An evaluation metric used to estimate the profitability of an investment or project by calculating the difference between the present value of cash inflows and outflows.

Capital Budgeting Analysis

The process of evaluating and selecting long-term investments that are in line with the goal of shareholder wealth maximization.

Payback

A capital budgeting method that calculates the length of time required to recoup the original investment.