The use of gross book value (GBV) for measuring the level of investment in depreciable assets (for purposes of calculating return on investment, ROI) is preferred by those who value the objectivity of:
An historical cost number.
The depreciation process.
Price-level adjusted data.
The cost-allocation process.
OPTION - HISTORICAL COST NUMBER.
The gross book value of asset is considered while calculating the return on investment.
The depreciable process means the orgininal cost of the asset and depreciation substracted.this process repeats.
Price level adjustment means based on the increase or decrease the price level are adjusted to the assets.
Cost allocation process means a specific cost is allocated to the assets and these are not considered in roi.
Current cost information means the cost of the asset that is readily available in the market. I.e, the fair value of the asset. And its considered as a part of ROI.
If you have any doubts please comment on the answer.
Get Answers For Free
Most questions answered within 1 hours.