Which of the following would be an argument for the use of net book value in the computation of operating assets in return on investment calculations?
A)It allows the manager to replace old, worn-out equipment with a minimum adverse impact on ROI.
B)It allows ROI to decrease over time as assets get older.
C)It is consistent with how plant and equipment items are reported on the balance sheet.
D)It eliminates both age of equipment and method of depreciation as factors in ROI computations.

Question

Quizplus · Accepted Answer

Using the net book value in return on investment calculations is consistent with reporting plant and equipment on the balance sheet. This provides a more accurate representation of the value of the company's assets, which in turn can help in making informed decisions about the company's financial performance.

Which of the Following Would Be an Argument for the Use