oleander

a

fatiger

5

bingning

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.