Managers evaluated using net book value for plant assets will tend to replace assets sooner than managers evaluated using gross book value.

Question

Quizplus · Accepted Answer

Managers evaluated using net book value are more likely to keep assets longer because the depreciation reduces the net book value over time, making the assets appear less costly on the books compared to evaluating them at gross book value, which does not account for depreciation.

Managers Evaluated Using Net Book Value for Plant Assets Will