The book value of a machine, as shown on the balance sheet, is not relevant in a decision concerning the replacement of that machine by another machine: TRUE
<h3>
What is the book value?</h3>
- Book value is the worth of an asset based on its balance sheet account balance in accounting.
- The value of an asset is determined by subtracting the asset's original cost from any depreciation, amortization, or impairment expenses.
- Traditionally, a company's book value is equal to its total assets minus intangible assets and liabilities.
- In practice, however, depending on the source of the computation, book value may include either goodwill or intangible assets, or both.
- The value inherent in its employees, which is part of a company's intellectual capital, is always overlooked.
- When intangible assets and goodwill are specifically omitted, the indicator is frequently defined as "tangible book value."
Therefore, the statement "the book value of a machine, as shown on the balance sheet, is not relevant in a decision concerning the replacement of that machine by another machine" is TRUE.
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Complete question:
The book value of a machine, as shown on the balance sheet, is not relevant in a decision concerning the replacement of that machine by another machine. (Ignore taxes.) TRUE or FALSE
