Use of net book value (NBV) in valuing investment in operating plant assets for investment centers, in contrast to using an estimate of current value, will:
A) Have no appreciable effect on ROI in most situations.
B) Have no appreciable effect on plant asset book value.
C) Have no appreciable effect on operating income reported by the investment centers.
D) Usually understate ROI.
E) Usually overstate ROI.

Question

Quizplus · Accepted Answer

The Answer of Use of net book value (NBV) in valuing investment in operating plant assets for investment centers, in contrast to using an estimate of current value, will:
A) Have no appreciable effect on ROI in most situations.
B) Have no appreciable effect on plant asset book value.
C) Have no appreciable effect on operating income reported by the investment centers.
D) Usually understate ROI.
E) Usually overstate ROI.

Use of Net Book Value (NBV) in Valuing Investment in Operating