Managers of Some Entities Have Resisted Depreciating Buildings in Accordance

question 20

Multiple Choice

Managers of some entities have resisted depreciating buildings in accordance with AASB 116.A reason suggested for this,based on the Positive Accounting Theory approach,is:

• A) Depreciating buildings when their value is generally increasing does not make economic sense.
• B) Management is concerned that the effect on ratios such as the times interest-covered and debt/equity may lead to an entity breaching its debt covenants.
• C) Management considers that when the asset is sold the amount of gain or loss that will be reflected in the books will be incorrect.
• D) Depreciating buildings when their value is generally increasing does not make economic sense and management is concerned that the effect on ratios such as the times interest-covered and debt/equity may lead to an entity breaching its debt covenants.
• E) None of the given answers.

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Definitions:

Workspace Architecture

The design and arrangement of physical and virtual spaces in a workplace to optimize functionality, efficiency, and employee well-being.

Intense Communication

A high level of exchange of information, ideas, or feelings, often characterized by strong engagement and frequent interactions among participants.

Substantive Conflicts

Are disagreements that arise over issues, goals, tasks, or resources that are significant to those involved.

Personality Clashes

Conflicts or disagreements that occur when individual differences or personal preferences are incompatible.