Question

For any given division (investment center) in an organization, the book value of current assets plus the net book value (NBV) of long-lived assets is the ______ of divisional assets.

Option 1:
Gross book value

Option 2:
Net working capital

Option 3:
Total asset value

Option 4:
Accumulated depreciation

Answer 1

The sum of the book value of current assets and the net book value (NBV) of long-lived assets for an investment center in an organization is known as the total asset value, which is Option 3 in the question provided.

Step-by-step explanation:

For any given division (investment center) in an organization, the book value of current assets plus the net book value (NBV) of long-lived assets is the total asset value of divisional assets. Therefore, the correct answer to the student's question is Option 3: Total asset value. This figure provides an assessment of what the division currently holds in terms of financial value before any depreciation or liabilities are accounted for. The concept of a T-account also adds value to this understanding by highlighting how assets are balanced with liabilities and net worth on a firm's balance sheet.