Because the Failure to Record Disposals of Property, Plant, and Equipment

question 95

Multiple Choice

Because the failure to record disposals of property, plant, and equipment can significantly affect the financial statements, the search for unrecorded disposals is essential.Which of the following is not a procedure used to verify disposals?

• A)Make inquiries of management and production personnel about the possibility of the disposal of assets.
• B)Review whether newly acquired assets replace existing assets.
• C)Test the valuation of fixed assets recorded in prior periods.
• D)Review plant modifications and changes in product line, taxes, or insurance coverage.

Understand the difference between methodologies that consider and ignore present value in capital investment analysis.

Be able to define and calculate the average rate of return and understand its significance.

Understand the concept of the cash payback period and how to calculate it.

Distinguish between net cash flow and net discounted cash flow.

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Definitions:

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