To be consistent with the historical cost principle, overhead costs incurred by an enterprise constructing its own building should be
a. allocated on the basis of lost production.
b. eliminated completely from the cost of the asset.
c. allocated on an opportunity cost basis.
d. allocated on a pro rata basis between the asset and normal operations
Answer: d. allocated on a pro rata basis between the asset and normal operations
Business
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Upward migration in the strategic role of foreign production sites arises when they upgrade their own capabilities.
a. true b. false
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Which of the following ignores the time value of money?
a. Internal rate of return b. Profitability index c. Net present value d. Cash payback
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