Answered: As compared to capitalizing a cash…

As compared to capitalizing a cash expenditure, what is the initial effect on asset turnover of immediately expensing the expenditure, all else equal? Asset turnover is:

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 7QTD

See similar textbooks

Related questions

Q: If a company buys an intangible asset, it can only utilize the revaluation model to evaluate the…

A: This question describe about the revaluation model to evaluate the asset's value later.

Q: Realizable value

A: Which one of the following terms best describes the amount of cash or cash equivalents that could…

Q: In the calculation of cash flow from operating activities, the loss on the disposal of noncurrent…

A: When the company dispose any asset with a proceeds amount less than the book value of the asset ,…

Q: for information on MACRS depreciation.) What is the required net investment, and what are the year 1…

A: Net Investment= Cost of equipment + freight and installation cost= 900000+100000=1000000 The net…

Q: Unless acquired under a business combination, intangible assets must be initially measured using…

A: Intangible assets are those which does not have physical substance. It includes copyright, goodwill,…

Q: Which of the following statements is true for historical cost valuations? (Select one or more)…

A: According to accounting principles, a historical cost is a method of valuing assets in which the…

Q: Which of the following is not a factor in selecting a depreciation method? a. salvage value b.…

A: Depreciation is charged on cost of assets on annual basis for repair and maintenance costs and…

Q: Value-in-use is O a. The discounted present value of future cash flows arising from use of the asset…

A: Value-in-use:-It is future cash inflows and outflows which arise from the continuous use of assets…

Q: reason that depreciation is a source of cash inflow is because

A: Any fixed asset purchased has a fixed life throughout which it has to be used. Over the course of…

Q: When nonmonetary assets are exchanged, a company records the cost of the nonmonetary asset acquired…

A: When a non monetary assets is exchanged for another non monetary assets. Asset shall be organised.…

Q: Profit on sale of fixed assets arises when: Sale price is more than the original purchase value of…

A: Profit on the sale of fixed assets arises when the book value of the asset is less than the selling…

Q: The value of "Property, Plant, & Equipment, net" reported on the balance sheet represents: A) The…

A: Fixed assets are an unavoidable component of every business organization. These assets are useful in…

Q: Residual value is O a. Present value. O b. Value in use. O . The net cash amount that is received…

A: The fixed assets may have a residual value that can be attained at the end of its life.

Q: Why do we exclude depreciation expense and the gain or loss on sale of an asset from the operating…

A: Operating activities are the activities that are related to the ongoing business of an individual or…

Q: If an asset is sold at a gain why is the gain subtracted from net income when computing the net cash…

A: Statement of cash flows: It is one of the financial statement that shows the cash and cash…

Q: The indirect approach subtracts depreciation costs from net income before calculating operating cash…

A: Given : The question explains about Using the indirect technique, depreciation expenses are…

Q: Tangible assets are first recorded at: Multiple Choice cost minus residual (or salvage) value. the…

A: The tangible assets should be recorded at cost and it includes all the expenses which are incurred…

Q: Why does the depreciation included in computing the annual cost of annual worth method but not in…

A: Depreciation is a separate provision for fixed assets. Fixed amount is charged out of profit during…

Q: A loss on impairment of an intangible asset under IFRS is the asset's: a. carrying amount less the…

Q: Assets acquired ina lump-sum purchase are valued based on: a. Their assessed valuation. b. Their…

A: As per IAS 16, when more than one item of property, plant, and equipment is purchased for a…

Q: Depreciation is based on the fair value of assets. An impairment loss occurs if the carrying value…

A: GIVEN Depreciation is based on the fair value of assets. An impairment loss occurs if…

Q: What is the first impact on asset turnover of promptly expensing a cash outlay compared to…

A: The Answer :

Q: Which of the following situations indicates that an asset is impaired?a. The net book value of the…

A: Impairment: It can be defined as a significant reduction in the recoverable value of the goodwill…

Q: "Depreciation is provided to not only cover capital expenditure during the span of Assets life, but…

A: Since there are multiple parts in this question only the first part will be answered. The capital…

Q: As compared to capitalizing a cash expenditure, what is the initial effect on asset turnover of…

A: Asset Turnover Ratio: The total asset turnover ratio evaluates the efficiency of the organization…

Q: In Able Company’s efforts to estimate a value for Baker Company's goodwill, Able is estimating Baker…

A: Goodwill means the reputation of the company due to any factor like location , product , price ,…

Q: Distinguish between annual income in the presence of depreciation and annual operating cash flow?

A: Meaning of Annual Income The total income earned by a business during an accounting period is known…

Q: When an intangible asset is acquired by an exchange of assets, which of the following measures will…

A: Intangible assets are those assets which we can not see or touch. These assets can only be felt.

Q: Valuing assets at the amount of cash or equivalents paid or the fair value of the consideration…

A: solution If the cash paid at the time of acquisition is used to measure an asset, then it is called…

Q: What is the purpose of amortisation? To allocate the cost of an intangible non-current asset…

A: Amortization and Depreciation are both terminology used in finance

Q: The cost of property acquired by direct cash purchase includes the cash paid and: A. the implied…

A: Property is a type of fixed assets that is being taken or acquired by the business. These can be…

Q: Which of the following values for an intangible asset would a company capitalize and amortize? a.)…

A: Intangible assets are those assets which cannot be touched or seen but can be felt. Goodwill,…

Q: Provide a brief explanation of why depreciation of capital assets is considered in determining…

A: Capital assets are those assets which are held by the business for longer period of time.…

Q: In determining the value in use, which of the following cash flow is excluded from the computation?…

A: As per provisions of IFRS, the value in use is used for the purpose of impairment of asset. If the…

Q: The undiscounted future net cash flow is used as a benchmark to determine any impairment löss on…

A: Intangible assets can be defined as those assets that are not physical in nature. They can not…

Q: If all values carry a + sign, cash flow before taxes is represented by the following equation:a.…

A: Cash flow before taxes: It includes the sum total of all the cash inflows and outflows before…

Q: In a replacement analysis, the market value of the currently owned asset a. does not impact the cash…

A: With the passage of the time, old assets are outdated and more cost is incurred to maintain. So, it…

Q: The amortization process is like what other process?A. depreciationB. valuationC. recognizing…

A: Some assets loses out their value over the period of time. These can be fixed assets or natural…

Q: Which of the following statement is incorrect as to acquisition of Property, Plant and Equipment on…

A: The question relates to Property, Plant and Equipment. The Property, Plant and Equipment will be…

Q: . What is the amount of depreciation under cash basis?

A: Cash basis of accounting is one of the basis of accounting, under which all cash receipts are…

Q: The primary measurement basis is A.The current market price if the asset currently held was sold…

A: Measurement basis provides information in financial reports which meets the qualitative…

Q: If an impairment of PPE is indicated, any impairment losses is recorded at an amount equal to the…

A: PPE that is Plant, Property and Equipment is the long-term asset for any organization. These are the…

Q: Does the value of any asset depends on the cash flows producedby the asset? Why?

A: Asset valuation involves the determination, using book values, of a fair market, or the present…

Q: To account for cash flows from operational operations, the indirect method adds depreciation…

A: Here is the Answer

Q: Which of the following best describes depreciation? A It is a means of spreading the payment for the…

A: Depreciation represents how much asset's value has been used and charge the same as expense in the…

Q: Which of the following is considered not a Capital expenditure? a. Training costs b. Delivery costs…

A: Lets understand the basics. As per IAS 16 "Property, plant and equipment", initial cost for PPE…

Question

As compared to capitalizing a cash expenditure, what is the initial effect on asset turnover of immediately expensing the expenditure, all else equal? Asset turnover is:

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

As compared to capitalizing a cash expenditure, what is the initial effect on asset turnover of immediately expensing the expenditure, all else equal? Asset turnover is: higher. lower. the same.
What is the first impact on asset turnover of promptly expensing a cash outlay compared to capitalizing it? The asset turnover rate is defined as follows:
Which one of the following terms best describes the amount of cash or cash equivalents that could currently be obtained by selling an asset in an orderly disposal? Fair value Residual value Realizable value Value in use
In determining the value in use, which of the following cash flow is excluded from the computation? I. Income tax receipts or payments. II. Net cash flows received or paid on the disposal of the asset at the end of its useful life in an arm's length transaction which is after using the asset. III. Future costs of improving or enhancing the asset's performance.
Under IFRS, the recoverable amount of an asset is The higher of an asset’s value in use or its fair value minus costs to sell. The estimated selling price in the ordinary course of business minus the estimated costs of completion and the estimated costs necessary to make the sale. The present value of the future cash flows expected to be derived from an asset. The amount obtainable from the sale of an asset in an arm’s length transaction between knowledgeable, willing parties, minus the costs of disposal.
Which of the following is excluded when projecting future cash flows for the purpose of determining an asset’s value in use? a. Revenues to be derived from the continuing use of the assetb. Residual value of the assetc. Costs of future improvements on the assetd. Disposal costs of the assetPLEASE ADD REFERENCE OR CITATION
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
Valuing assets at the amount of cash or equivalents paid or the fair value of the consideration given to acquire them at the time of acquisition most closely describes which measurement of fi nancial statement elements? A . Current cost
Provide a brief explanation of why depreciation of capital assets is considered in determining potential net income from an investment, but not included in determining the net cash flow of an investment.
Which of the following is not a factor in selecting a depreciation method? a. salvage valueb. repair and maintenance costsc. Inflationd. the risk associated with the cash flows from the asset
Under the impairment of assets, value-in-use is * a. The undiscounted present value of future cash flows arising from the continuing use of the asset and from its disposal. b. The discounted present value of future cash flows arising from the continuing use of the asset and from its disposal. c. The higher of an asset's fair value less cost to sell and its market value d. The amount at which the asset is recognized in the statement of financial position
The primary measurement basis is a.) The current market price if the asset currently held was sold on the open market. b.)The current market price if the asset held was purchased on the open market. c.) The present value of the cash flows that the asset is expected to generate. d.) The market price at the date the asset was acquired.