A Fixed Asset Costs €200,has an Expected Useful Life of Four

question 6

Multiple Choice

A fixed asset costs €200,has an expected useful life of four years,with zero scrap value and the replacement cost of a new asset rises by €20 per annum.Calculate the holding gain reserve at the end of year 2.

• A)€55
• B)€50
• C)€40
• D)€35

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Definitions:

Earn More Profit

Refers to the increase in net revenue a company achieves through strategies such as cost reduction, price adjustment, or market expansion.

Elastic Demand

A condition in which the percentage change in quantity demanded of a product is greater than the percentage change in its price, indicating high sensitivity to price changes.

Senior Citizens

Individuals who are considered elderly, typically qualifying for certain benefits at a particular age, often 65 or older.

Profit-Maximizing

A strategy or behavior aimed at making the highest possible profit, where marginal costs equal marginal revenues.