When the service requirements for a capital (fixed) asset extend beyond the defender's remaining service life in a defender-challenger analysis, it is usually assumed that the defender can be replaced by an another used asset with identical cost. a) True b) False A business should maintain accurate depreciation records a) to track the value of its physical assets b) to capture true production costs c) to calculate its income tax liabilities d) all of the above answers. 7. Reasons for replacing capital (fixed) assets include a) wear and tear, equity, obsolescence b) wear and tear, obsolescence and owner preference c) wear and tear, obsolescence, inadequacy d) obsolescence, inadequacy and preference 12. Economic life is defined as the period of time an asset a) can no longer be repaired or refurbished so that it can perform a useful function b) cannot perform its intended function without a major overhaul c) might reasonably be expected to be useful in the production of income. d) will be retained by a prudent owner to minimize costs. 13. In a defender/challenger replacement situation, the defender is a) always beyond its economic life b) never beyond its economic life c) None of the above answers. 17. If the cost of the defender for the coming year exceeded the challenger's annual equivalent cost, your decision would be to a) Switch from the defender to the challenger now b) Keep the defender until another challenger is available c) Take the defender or the challenger d) Reject both the defender and the challenger When the service requirements for a capital (fixed) asset extend beyond the defender's remaining service life in a defender-challenger analysis, it is usually assumed that the defender can be replaced by an another used asset with identical cost. a) True b) False A business should maintain accurate depreciation records a) to track the value of its physical assets b) to capture true production costs c) to calculate its income tax liabilities d) all of the above answers. 7. Reasons for replacing capital (fixed) assets include a) wear and tear, equity, obsolescence b) wear and tear, obsolescence and owner preference c) wear and tear, obsolescence, inadequacy d) obsolescence, inadequacy and preference 12. Economic life is defined as the period of time an asset a) can no longer be repaired or refurbished so that it can perform a useful function b) cannot perform its intended function without a major overhaul c) might reasonably be expected to be useful in the production of income. d) will be retained by a prudent owner to minimize costs. 13. In a defender/challenger replacement situation, the defender is a) always beyond its economic life b) never beyond its economic life c) None of the above answers. 17. If the cost of the defender for the coming year exceeded the challenger's annual equivalent cost, your decision would be to a) Switch from the defender to the challenger now b) Keep the defender until another challenger is available c) Take the defender or the challenger d) Reject both the defender and the challenger
