Vol. 3 LM 6 Long-Lived Assets Capitalising vs Expensing

Question 1

complete the statement

The items of expenditure giving rise to the most relevant differences across companies will vary by

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Answer 1

industry

Question 2

how do companies try to game their valuations using their cash flow statements

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Answer 2

maximising reported cash flow from operations by capitalising expenditures that should be expensed

Question 3

which cash flow activity is an important consideration in some valuation models

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Answer 3

cash flow from operating activities

Question 4

capitalising versus expensing

__(1)__ are typically treated as an investment cash outflow whereas __(2)__ reduce operating cash flows

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Answer 4

(1) capitalising the expenditure
(2) expensing the expenditure

Question 5

capitalising vs expensing

typically results in greater amounts reported as cash from operations

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Answer 5

capitalising