To calculate economic value added,several adjustments are made to after tax operating profit that include ________ and ________.
A) the use of LIFO inventory valuation; capitalization of research and development costs
B) taxes paid rather than tax expense; capitalization of research and development costs
C) the use of average cost inventory valuation; current costs of fixed assets
D) the use of LIFO inventory valuation; current costs of fixed assets

Question

Quizplus · Accepted Answer

Economic value added (EVA) is calculated by making adjustments to after-tax operating profit, and two common adjustments are taxes paid rather than tax expense and capitalization of research and development costs. The use of LIFO inventory valuation and current costs of fixed assets are not factors typically considered in EVA calculations. The use of average cost inventory valuation may be a factor in EVA calculations, but it is not as commonly used as the adjustments mentioned in option B.

To Calculate Economic Value Added,several Adjustments Are Made to After