Indicate Whether Each of the Following Statements Is True or False

question 30

Short Answer

Indicate whether each of the following statements is true or false.
1. Indirect costs cannot be traced to a cost object in a cost-effective manner.
2. For a factory with several departments, each department could be treated as a cost object.
3. Depreciation on a factory building is a direct cost for the departments in the factory.
4. For a factory with several departments, depreciation on equipment used in one department would be a direct cost to that department.
5. An individual cost cannot be both fixed and direct with respect to a particular cost object.

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Definitions:

Synergistic Benefits

The enhanced value created by the combination of two or more companies or assets, which is greater than the sum of their separate effects.

Merger

The combination of two or more companies into a new entity, often aiming to achieve more efficiency or market share.

Fair Market Value

The price that a willing buyer and a willing seller would agree upon, given both parties have reasonable knowledge of the asset’s particulars.

Purchase Method

An accounting approach used to consolidate the financial statements of a buyer and a target company after an acquisition.