INFORMATION FOR QUESTIONS 20 TO 23 Item Selected Balance Sheet and Income Statement Items for ABC Company Limited Number 1 Cash Retained Earnings 3 Current Interest Expense on ABC loans from chartered bank 4 Inventories Annual Sales Working Capital Loan from Bank XYZ Current year income taxes Current year depreciation expense Current year cost of goods sold 10 Common Shares 11 Corporate Bonds Payable by ABC Company in 7 years 12 Accounts Receivable Accounts Payable 13 Long-Term (10 years) Bond Investments by ABC Company 14 Historical Cost of Plant and Equipment 15 Cumulative Plant & Equipment Depreciation 16 Income Taxes Owed from last year (payable now) 17 Contributed Capital 18 2. 20. Item number 8 is a) a revenue/Income Statement item b) an expense/Income Statement item c) an asset/Balance Sheet item d) a liability/Balance Sheet item e) an Owners' Equity/Balance Sheet item 21. Item number 11 is a) a revenue/Income Statement item b) an expense/Income Statement item c) an asset/Balance Sheet item d) a liability/Balance Sheet item e) an Owners' Equity/Balance Sheet item 22. Item number 14 is a) a revenue/Income Statement item b) an expense/Income Statement item c) an asset/Balance Sheet item d) a liability/Balance Sheet item e) an Owners' Equity/Balance Sheet item 23. Item number 16 is a) a revenue/Income Statement item b) an expense/Income Statement item c) an asset/Balance Sheet item d) a liability/Balance Sheet item e) an Owners' Equity/Balance Sheet item If the discounted payback method generates identical recovery periods for two independent projects, their Present Worth and Annual Equivalent Worth must be identical. a) True b) False 24. 25. The switch in the decision rule from annual cost based on the defender's economic life to an incremental (i.e., year-to-year) cost occurs when a) the defender's annual equivalent reaches a minimum b) the defender's annual equivalent cost reaches a maximum c) the defender's incremental cost exceeds its annual equivalent cost d) None of the above answers. 26. The decision to replace or keep the defender will depend on the relationship between the cost of keeping the defender one more year and the challenger's annual equivalent cost (based on the challenger's economic life). We can conclude that the a) challenger is beyond its economic life b) defender is not beyond its economic life c) none of the above