Which of the following would be an argument for using the gross cost of plant and equipment as part of operating assets in return on investment computations? It eliminates the age of equipment as a factor in ROI computations. It is consistent with the computation of net operating income, which includes depreciation as an operating expense. It discourages the replacement of old, worn-out equipment because of the dramatic, adverse effect on ROI. It is consistent with the balance sheet

Operating assets are the assets of the entity which are acquired for or used in the operations of…

Answered: Which of the following would be an…

Auditing: A Risk Based-Approach to Conducting a Quality Audit

10th Edition

ISBN:9781305080577

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter16: Advanced Topics Concerning Complex Auditing Judgments

Section: Chapter Questions

Problem 46RSCQ

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Which of the following would be an argument for using the gross cost of plant and equipment as part of operating assets in return on investment computations?

		It eliminates the age of equipment as a factor in ROI computations.
		It is consistent with the computation of net operating income, which includes depreciation as an operating expense.
		It discourages the replacement of old, worn-out equipment because of the dramatic, adverse effect on ROI.
		It is consistent with the balance sheet

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