A Purchaser of the Assets of a Business Must Allocate

question 77

Multiple Choice

A purchaser of the assets of a business must allocate the purchase price to the individual assets in accordance with the written agreement between the purchaser and the seller.Which of the following assets would be least preferred for purposes of allocating value from the purchaser point of view?

• A)goodwill
• B)equipment
• C)office building
• D)inventory

Analyze the effects of advertising budget and product cost changes on net operating income.

Determine unit sales and dollar sales to attain specific target profits.

Understand and apply the concept of degree of operating leverage to estimate changes in net operating income.

Estimate variable and fixed costs using least-squares regression and high-low methods.

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Definitions:

Normal Profit

The minimum profit necessary for a company to remain competitive in its market, covering its opportunity costs.

Replacement Cost

The cost required to replace an asset with a new one of similar kind and quality at current prices.

Cost Of Completion

The estimated expenses associated with finishing a project, product, or service in its entirety.

Normal Profit

The minimum amount of profit necessary for a company to remain competitive in the market, often considered a breakeven profit.