Which of the Following Should Be Included in the Initial

question 119

Multiple Choice

Which of the following should be included in the initial outlay?

• A) taxable gain on the sale of old equipment being replaced
• B) first year depreciation expense on any new equipment purchased
• C) preexisting firm overhead reallocated to the new project
• D) increased investment in inventory and accounts receivable

---

Definitions:

Mortgage Issued

The lending of funds by a financial institution to an individual or organization for the purchase of real estate, secured by the property itself.

Upgrade Cost

The expense incurred to improve the quality, features, or performance of an asset, product, or system beyond its original specifications.

Overhaul

A comprehensive inspection, maintenance, and repair process to restore equipment, machines, or systems to optimum working condition.

Extraordinary Repairs

Large, infrequent expenditures that extend the useful life of an asset beyond its original forecast.