When measuring invested capital,managers in practice predominantly use ________.
A)Net book value at current cost
B)Net book value at historical cost
C)Gross book value at historical cost
D)Gross book value at future cost

Question

Quizplus · Accepted Answer

Managers in practice predominantly use Net book value at historical cost to measure invested capital. This is because it provides a conservative estimate of the capital invested in the business and is more reliable than basing it on future costs, which are uncertain. Gross book value includes accumulated depreciation and is typically used to report assets on financial statements, but it is not the preferred measure for calculating invested capital.

When Measuring Invested Capital,managers in Practice Predominantly Use ________