Question

When calculating return on fixed assets, which of the following items should be taken out from the asset side of the balance sheet?
I. Copyrights
II. Plant, Property and Equipment
III. Goodwill
IV. Inventory

II and III only

III only

I and III only

II and IV only

I only

Answer 1

The correct answer is Plant, Property and Equipments and Goodwill

The fixed assets refers to the assets of the company that gives return for the long period of the time and it is not liquid assets means it can't be converted into cash easily as Current assets which can be converted into cash easily and it includes Inventory, Accounts receivables etc.

Plants, Property and equipments are fixed assets as it is purchased for long term use and Goodwill is Intangible fixed assets means it can't be seen but considered as fixed assets, It is the benefit that the company generates from the reputation of the company in the market.

Inventory is a Liquid assets and it is Current assets while copyright is the official right of the company on the work that is done by them, It is also Intangible assets.