Many Telecom Firms Began Digging Up the Ground and Laying

question 64

Multiple Choice

Many telecom firms began digging up the ground and laying webs of fiberglass to meet the growing demand for Internet connectivity. However, rivals and startups began to imitate these firms and soon these new assets were not so rare and each day they seemed to be less valuable. It can be inferred from this example that:

• A) resource-based thinking can help avoid the trap of carelessly entering markets simply because growth is spotted.
• B) the telecommunications market is only big enough to support one or two major players.
• C) the immense scale advantages enjoyed by major firms can help them fight off competition from newer entrants.
• D) technology assets that require high investment and maintenance are liable to becoming obsolete much quicker than others.
• E) the scale of technology investment required to run a business is not a huge enough factor to act as a barrier to entry for new, smaller competitors.

Analyze and record expenditures associated with acquiring and improving long-lived assets.

Understand the financial statement presentation of long-lived assets and related expenses.

Distinguish between various types of intangible assets and their classifications.

Calculate the cost of land and buildings considering acquisition and improvement costs.

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Definitions:

Direct Materials

The raw materials that are directly traceable to the manufacturing of a product and constitute a significant portion of the production cost.

Direct Labor

The wages or salaries paid to employees who are directly involved in producing goods or providing services.

Factory Overhead

All indirect costs associated with manufacturing, excluding direct materials and direct labor, such as utilities, rent, and salaries for managers.

Direct Labor

The labor costs directly traceable to the production of goods, including wages of workers on the production line.