Depreciation

question 4

Multiple Choice

Depreciation

• A)reduces both the net fixed assets and the costs of a firm.
• B)decreases net fixed assets,net income,and operating cash flows.
• C)is a noncash expense that decreases the selling,general,and administrative expenses.
• D)is a noncash expense that reduces the pretax income.
• E)increases the net fixed assets as shown on the balance sheet.

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Definitions:

Acquisition

The process by which one company takes control over another company either by purchasing its shares, assets, or both.

Consolidated Balance Sheet

A balance sheet that represents the combined financial position of a parent company and its subsidiaries as if they were a single entity.

Book Value

The value of an asset according to its balance sheet account balance, taking into account the cost of the asset less any depreciation, amortization, or impairment costs.

Fair Value

The financial return from selling an asset or the financial obligation to cover a liability in a transaction among market entities at the point of appraisal.