Asked by Edward Chang on May 28, 2024
Verified
Land held for possible plant expansion would be included as an operating asset when computing return on investment (ROI).
Operating Asset
Assets used in the day-to-day operations of a business to generate revenue, such as machinery, buildings, and equipment.
Plant Expansion
Plant expansion refers to the process of enlarging the capacity or physical size of a manufacturing facility to increase production capabilities, accommodate new machinery, or improve efficiency.
Return On Investment
A performance measure used to evaluate the efficiency or profitability of an investment or compare the efficiency of several different investments.
- Grasp how land and assets held for expansion are accounted for in financial analysis.
Verified Answer
LA
Linda AwuyehMay 30, 2024
Final Answer :
False
Explanation :
Land held for possible plant expansion is considered an investment for future use, not currently used in operations, and therefore is not included in operating assets when computing ROI. Operating assets typically include assets directly involved in the company's primary operations.
Learning Objectives
- Grasp how land and assets held for expansion are accounted for in financial analysis.