The Asset Section of the January 1, 20X7 Balance Sheet

question 84

Multiple Choice

The asset section of the January 1, 20X7 balance sheet of Murphy Company includes a machine, which was acquired on January 1, 20X1. The machine's original cost was $1,000,000, and the estimated life was determined to be 10 years. The estimated residual value was zero, and the straight-line method of depreciation was chosen.
-If operating income BEFORE amortization is $280,000, the rate of return on gross book value for 20X7 is

• A) 18 percent.
• B) 28 percent.
• C) 45 percent.
• D) 70 percent.

Acknowledge the ethical principles and values in decision making.

Understand the concept of competency and its significance in organizational behavior.

Recognize the importance of leadership, vision, and strategic planning in organizational success.

Understand the foundational competencies required for effective personal and professional development.

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Definitions:

Fixed Costs

Expenses that remain constant regardless of the amount of production or output, like lease payments or wages.

Fixed Costs

Costs that do not vary with the level of production or sales, such as rent, salaries, and insurance, which are incurred regardless of the amount of goods or services produced.

Economic Profit

Profit that accounts for both explicit costs and opportunity costs.

Economic Profit

The financial gain made in a transaction after subtracting both the explicit and implicit costs.