What Is the "Disappearing Plant" Problem That Is Addressed by FASB

question 12

Multiple Choice

What is the "disappearing plant" problem that is addressed by FASB ASC 830, Foreign Currency Matters?

• A) This refers to the accelerated depreciation methods that are popular for fixed asset valuation.
• B) High inflation can result in extreme decreases in the reported amounts for foreign fixed assets.
• C) Cheap foreign currency results in U.S. companies moving factory operations offshore.
• D) Investment in fixed assets was not being reported on foreign subsidiary financial statements.

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Definitions:

Increasing Rate

A situation where something grows or rises in value at a progressively higher pace over time.

Marginal Cost

The expenditure associated with creating another single unit of a product or service.

Average Variable Cost

The total variable costs of production divided by the quantity of output produced, illustrating the per-unit variable cost.

Total Cost

The sum of all expenses incurred in the production of goods or services, including fixed and variable costs.