question archive 1) “A branch office or business segment that shows negative operating income should be shut down
1) “A branch office or business segment that shows negative operating income should be shut down
Subject:AccountingPrice:2.87 Bought7
1) “A branch office or business segment that shows negative operating income should be shut down.” Do you agree? Explain briefly.
2) “Cost written off as depreciation on equipment already purchased is always irrelevant.” Do you agree? Why?
Purchase A New Answer
Custom new solution created by our subject matter experts
GET A QUOTE
Answer Preview
Answer:
1)
No. For example, if the revenues that will be lost exceed the costs that will be saved, the branch or business segment should not be shut down. Shutting down will only increase the loss. Allocated costs and fixed costs that will not be saved are irrelevant to the shut-down decision.
2)
Cost written off as depreciation is irrelevant when it pertains to a past cost such as equipment already purchased. But the purchase cost of new equipment to be acquired in the future that will then be written off as depreciation is often relevant.
