Division a Has a Building with the Same Original Cost

question 49

Multiple Choice

Division A has a building with the same original cost as Division B,except that it was purchased four years before Division B's building.If both divisions have identical operating incomes and use the net book value approach for calculating return on investment (ROI) ,which of the following will be true?

• A)Both divisions will have the same ROI.
• B)Division B will have a higher ROI.
• C)Division A will have a higher ROI.
• D)More information is needed to answer this question.
• E)None of the answer choices is correct.

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Definitions:

Securities and Exchange Commission

A U.S. federal agency responsible for enforcing federal securities laws and regulating the securities industry and the nation's stock and options exchanges.

Financial Statement

A formal record of the financial activities and position of a business, person, or other entity, typically including balance sheets, income statements, and cash flow statements.

Constructive Fraud

Deception or misrepresentation made without the intent to deceive, usually due to neglect or failure to fulfill a duty, which causes harm to another party.

Grossly Negligent

A severe lack of care or the extreme departure from the care a reasonable person would exercise in a similar situation, often resulting in harm or damage.