Which of the Following Statements Is False

question 54

Multiple Choice

Which of the following statements is false?

• A) Depreciation is a method used for accounting and tax purposes to allocate the original purchase cost of the asset over its life.
• B) Sometimes the firm explicitly forecast free cash flow over a shorter horizon than the full horizon of the project or investment.
• C) Earnings include the cost of capital investments, but do not include non-cash charges, such as depreciation.
• D) Firms often report a different depreciation expense for accounting and for tax purposes.

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Definitions:

Dividends

Funds disbursed by a company to its stockholders, typically from earnings.

Consolidation Worksheet

A tool used in preparing consolidated financial statements that combines the financial information of a parent company and its subsidiaries.

Goodwill Impairment

A charge that companies record when the book value of goodwill on their balance sheets exceeds its estimated fair value, indicating the asset has decreased in value.

Recoverable Amount

The higher of an asset's fair value less costs of disposal and its value in use, reflecting the estimated amount that can be realized from the asset.