Machine-translated by Google. Questions are authored in English.
Top

Discussion

The defender's book value enters a replacement study only through

  • A.the interest payable on the original loan
  • B.the tax on any gain or loss on disposal
  • C.its effect on the annual operating cost
  • D.the depreciation still to be charged

Answer: B

Correct answer: the tax on any gain or loss on disposal

Book value has no economic meaning of its own - it is an accounting figure - but it determines the taxable gain or loss when the asset is sold, and that tax is a real cash flow. So book value enters the analysis at one remove, through the tax computation, and nowhere else.

No comment is present. Be the first to comment.
Loading…

Post your comment

Please log in or register to post a comment.