By Using the Rate of Return on Investment as a Divisional

question 81

True/False

By using the rate of return on investment as a divisional performance measure, divisional managers will always be motivated to invest in proposals which will increase the overall rate of return for the company.

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Definitions:

Partnership Basis

Refers to an individual partner's investment in a partnership, used for determining the tax implications of the partnership's operations on the individual.

Equal Partners

Individuals or entities that share equally in the rights, responsibilities, and profits of a partnership.

Step-Into-The-Shoes

A term relating to the transfer of tax basis from one party to another, preserving the original cost basis for tax calculation.

Depreciation Period

The estimated useful life of a tangible asset over which the cost of the asset is spread for accounting and tax purposes.