Johnson Limited Estimated the Net Present Value of Future Cash

question 20

Multiple Choice

Johnson Limited estimated the net present value of future cash flows from specialised plant acquired under a business combination to be $30 000. A replacement cost for the plant is estimated to be $33 000. The plant has been independently appraised at a value of $31 000. A similar item of plant cost the acquirer $29 000 last year. What is the value for recognition of the plant under a business combination?

• A) $29 000.
• B) $30 000.
• C) $33 000.
• D) $31 000.

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Definitions:

Bredt's Rule

A principle in organic chemistry stating that bridgehead carbon atoms cannot possess double bonds if the ring system is small due to excessive angle strain.

2-Butanol

An organic chemical compound, a secondary alcohol, with the formula CH3CH(OH)CH2CH3, characterized by a hydroxyl group attached to the second carbon of a butane chain.

Butane

A gas compound known as C4H10, which can be found in two different structural variations, utilized for fuel and cooling purposes.

Dehydrohalogenation

A chemical reaction in which a halogen atom and a hydrogen atom are removed from an organic molecule, forming an alkene.