In Determining the Dollar Amount to Use for Operating Assets

question 2

Multiple Choice

In determining the dollar amount to use for operating assets in the return on investment (ROI) calculation,companies will generally use either net book value or gross cost of the assets.Which of the following is an argument for the use of net book value rather than gross cost?

• A)It is consistent with how assets are reported on the balance sheet.
• B)It eliminates the depreciation method as a factor in ROI calculations.
• C)It encourages the replacement of old,worn-out equipment.
• D)All of the above.

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Definitions:

Union

An organization of workers formed to protect and advance their rights and interests; also refers to the act of uniting or the state of being united.

Income Tax

A tax imposed by the government directly on individuals' or entities' income.

Lincoln

The 16th President of the United States, Abraham Lincoln, who led the nation during the Civil War and is known for issuing the Emancipation Proclamation.