An investment property is considered to generate cash flows that are:
A) dependent on the other assets of the entity.
B) designed to reduce taxes.
C) largely independent of the other assets of the entity.
D) all of the given answers.

Question

Quizplus · Accepted Answer

The cash flows generated by an investment property are largely independent of the other assets of the entity. This is because the property is specifically acquired for the purpose of generating rental income or capital appreciation, and its performance is not directly tied to the performance of the entity's other assets. Option A is incorrect because the cash flows from the investment property are not dependent on the other assets of the entity. Option B is incorrect because while reducing taxes may be a benefit of owning an investment property, it is not the primary driver of cash flows from the property. Option D is incorrect because only option C is correct.

An Investment Property Is Considered to Generate Cash Flows That