When does a company decide to replace an existing asset? Multiple choice question. When the technology used by the company is outdated When the company is making huge losses When the life of the asset is over and it cannot be used further When the operating cashflow of existing asset is higher than the new asset

When does a company decide to replace an existing asset? Multiple choice question. When the technology used by the company is outdated When the company is making huge losses When the life of the asset is over and it cannot be used further When the operating cashflow of existing asset is higher than the new asset

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 5Q: Your supervisor is on the companys capital investment decision team that is to decide on...

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1. This arises when the asset is no longer useful to the firm because of an increase in the volume of operations. 2.This occurs when an asset wears out from long use and is discarded or sold or junked 3.This includes expansion, enlargement or extension of an old asset
4. What factors should be considered when estimating a new business' NINV? Is it any different for an asset replacement project. 5. Why is depreciation, a noncash expense, considered when estimating a project's net cash flows? 6. What are the potential tax consequences of selling an old asset in an asset replacement investment decision?
Which of the following business strategies is most likely toincrease the net cash flows of a software developer in theshort run but reduce them over a longer term?a. Develop software that is more costly to create but easierto update and improve. b. Lower the price of existing versions of products as cus-tomer demand begins to fall. c. Reduce expenditures for the purpose of developing newproducts.d. Purchase the building in which the business operates(assume the company currently rents this location).
please dont provide answer in image format thank you Under the historic cost approach, the depreciation charges will be based totally on the original value of the assets, which might also be decrease than the modern-day market value. As a result, the pronounced earnings for the duration will be greater than if the market cost strategy had been chosen. Similarly, the announcement of cash flows will be affected, as the money outflows for the buy of the assets will be decrease below the historic price approach. what does the sentence mentioned above mean? please explain
When determining the estimated useful life of an intangible asset which factor is NOT important to consider? Q24 Select one: a. The initial costs incurred in developing the intangible asset. b. The purpose for which the asset will be used and for how long the usage will last. c. Will competitors’ ability to enter the market have an impact on the estimated future demand for the products or the asset? d. With change in management teams, will the new management team be able to manage the asset effectively?
If technology is changing rapidly, a firm should (a). expense plant assets immediately because of the uncertainty of future benefits. (b). depreciate plant assets over long periods of time. (c). consider an accelerated rate of depreciation. (d). use the straight-line method of depreciation as it is the easiest.
Which of the following statements is the assumption on which straight line depreciation is based? Service value declines as a function of time rather than use Physical wear and tear are more important than economic obsolescence Service value declines as function of obsolescence rather than time The operating efficiency of the asset decrease in later years
Impairment of a long-term operating asset occurs when ________. Group of answer choices an asset or part of an asset is removed from the asset portfolio an asset's total future cash-generating ability falls below its carrying value there is a failure to meet the legal obligations or conditions of a loan by which that asset was acquired the carrying value of the asset is systematically reduced over its useful economic life
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A disadvantage of using the payback period to compare investment alternatives is that it a. Ignores cash flows beyond the payback period. b. Cannot be used to compare alternatives with different initial investments. c. Cannot be used when cash flows are not uniform. d. Involves the time value of money. e. Cannot be used if a company records depreciation.
Assuming that there are no income taxes, which of the following is correct concerning depreciation? Select one: a. Depreciation reduces net income but does not change cash from operations. b. Depreciation provides less cash from operations than would have been available without the depreciation. c. Depreciation builds a cash reserve to fund the replacement of plant, property and equipment d. None of the other choices is correct. e. Depreciation increases cash from operations and decreases net income.
In a replacement analysis, the market value of the currently owned asset a. does not impact the cash flows of the replacement asset(s) in the opportunity cost approach b. does not impact the cash flows of the current asset in the cash flow approach if the current asset is kept c. is treated as a salvage value for the current asset in the cash flow approach if the current asset is kept d. is added to the first cost of the replacement asset(s) in the opportunity cost approach.