The book value of assets:
A)is determined under Generally Accepted Accounting Principles (GAAP)and is based on the cost of those assets.
B)represents the true market value of those assets according to GAAP.
C)is always the best measure of the company's value to an investor.
D)is always higher than the replacement cost of the assets.
E)is shown on the firm's income statement.

Question

Quizplus · Accepted Answer

The book value of assets is determined under GAAP and is based on the cost of those assets. It represents the historical cost of the assets less any accumulated depreciation or impairment. It does not necessarily reflect the true market value of those assets, and it may not be the best measure of the company's value to an investor. The replacement cost may or may not be higher than the book value depending on market conditions and other factors. The book value of assets is typically shown on the firm's balance sheet, not the income statement.

The Book Value of Assets