The book value of a firm is: A. equivalent to the firm's market value provided that the firm has some fixed B. based on historical cost. C. generally greater than the market value when fixed assets are included. D. generally greater than the market value when fixed assets are included. E. generally greater than the market value when fixed assets are included.

Respuesta :

Answer:

The answer is B. on historical cost.

Explanation:

Book value is traditionally calculated as the difference between a company's total assets and total liabilities.

An asset's book value is equal to its carrying value(historical cost of an asset minus accumulated depreciation of the asset) on the balance sheet.

The cost used in valuing assets and liabilities are historical cost. For example the cost of acquiring an asset will still be carried on the balance sheet till the asset is fully depreciated.