What issue can occur in your model if the useful life of the new fixed assets is less than the remaining years in the forecast period?\\n\\nA. You can under depreciate the fixed assets\\n\\nB. You can over depreciate the fixed assets\\n\\nC. You will no longer be able to use a waterfall structure for your depreciation schedule

What issue can occur in your model if the useful life of the new fixed assets is less than the remaining years in the forecast period?\\n\\nA. You can under depreciate the fixed assets\\n\\nB. You can over depreciate the fixed assets\\n\\nC. You will no longer be able to use a waterfall structure for your depreciation schedule

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter10: Capital Budgeting: Decision Criteria And Real Option

Section: Chapter Questions

Problem 8QTD

See similar textbooks

Similar questions

Which of the following best describes depreciation?A It is a means of spreading the payment for the asset over its total estimated lifeB It represents the decline in the market value of the assetC It is a means of spreading the cost of an asset over its estimated useful lifeD It is a way of estimating the cash needed to replace the asset in the future
What are the estimates when calculating depreciation? Which estimates may be revised? What happens when you make a change in the estimate?How the change affects future calculations?Provide a simple example (if you cannot find one, make up your own)
When moving from the low end to the high end of the relevant range, straight-line depreciation expense per unit decreases. Could somebody explain why?
True or false If you are still using the asset after its estimated useful life is over? You stop taking further depreciation?
Evaluate the consequences of depreciation charged on the historical cost of the assets. I) depreciation is calculated on the original cost of fixed assets, the resulting figure under accumulated depreciation will be only the amount equivalent to the original costof the asset. II) If depreciation is calculated as per historical accounting, sufficient funds will not be available for assets' replacement when its life is over. III) the replacement cost of the asset will be more than the original cost of inflation so that replacement provisions made by the way of depreciation charge on the original cost will be insufficient. IV) the conventional system of accounts based on historical cost does not give a true and fair view of the business enterprise. a. Statements I, Il and IV b. Statements I, II II and IV C. Statements I, Il and II d. Statements II, IIl and IV
A student is defending a certain depreciation method. She uses the argument that repairs and maintenance costs will probably increase as the asset get older. She also argues that the asset will produce less as it gets older. What depreciation methos is she probably defending? a. Straight-line b. Sum-of-the-year's-digits c. Sinking-fund d. Activity
Which of the following will maximize net income by minimizing depreciation expense in the first year of the asset’s life? a. Short service life, high residual value, and straightline depreciation.b. Long service life, high residual value, and straightline depreciation.c. Short service life, low residual value, and doubledeclining- balance depreciation.d. Long service life, high residual value, and doubledeclining- balance depreciation.
What are the estimates when calculating depreciation Which estimates may be revised What happens when you make a change in estimate, How does the change affect future calculations? Provide a simple example (if you cannot find one, make up your own)
In recording amortization of intangible asset, why isn't there an entry such as a credit to accumulated amortization? Why isn't it done the equivalent way we'd have for a fixed asset by keeping track of accumulated depreciation. Instead I notice the value of whatever the intangible asset is, is directly reduced by crediting the intangible asset When it's time to amortize. I'm guessing we could reduce the value of a fixed asset too directly. Just want to confirm that there hasn't been any recent changes to the idea of accumulated depreciation.
The AW of a project can be estimated by reducing all cash flows including the capital investment, salvage value in terms of annualized cash flows at an interest rate( i). Select one: True False
Which of the following statement best describes depreciation? a. It is a means of spreading the payment for non-current assets over a period of years b. It is a decline in the market value of assets c. It is a means of spreading the cost of non-current assets over the estimated useful life d. It is a means of estimating the amount of money needed to replace the assets
Why is depreciation expense recognized? Select one: a. To provide a better estimate of the market value of the depreciated assets. b. So that the balance sheet value of plant assets will more accurately reflect the replacement cost of the assets. c. To ensure that cash will be available at the end of the assets' useful life in order to replace it. d. To match the cost of the asset against the revenue using a reasonable allocation. method. Save AnswersNext