24、Assume U.S. GAAP (generally accepted accounting principles) applies unless otherwise noted. Which of the following adjustments to the assumed useful life and assumed salvage value of a company's assets would most likely decrease the company's total asset turnover ratio? | Assumed useful life | Assumed salvage value | A. | Longer | Lower | B. | Longer | Higher | C. | Shorter | Lower | D. | Shorter | Higher |
A. Answer A B. Answer B C. Answer C D. Answer D
Correct answer = B
"Analysis of Long-Lived Assets: Part II - Analysis of Depreciation and Impairment," Gerald I. White, Ashwinpaul C. Sondhi, and Dov Fried
2008 Modular Level I, Vol. 3, pp. 394-397
Study Session 9-37-b
demonstrate how modifying the depreciation method, the estimated useful life, and/or the salvage value used in accounting for long-lived assets affect financial statements and ratios
A longer useful life and higher salvage value are consistent with lower depreciation expense, which results in a higher net asset value. Asset turnover (Sales/Total assets) would decrease because sales would be constant while assets would be higher due to smaller depreciation charges. | 
发表于 2008-5-27 14:17
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