Asset Management Managing Asset Lifecycles 2

Question 1

Which lifecycle phase is characterized by the highest capital expenditure for a physical asset?

Accepted Answer

Acquisition

Answer

The acquisition phase typically involves the largest single capital outlay, covering purchase price, installation, and commissioning costs.

Question 2

A company's equipment has a book value of $0 but remains operationally useful. What is the most appropriate action?

Accepted Answer

Continue operating it with updated maintenance records

Answer

Fully depreciated assets can remain in service as long as they are functional; the key is maintaining accurate records and continuing maintenance.

Question 3

What does the term 'ghost asset' refer to in asset management?

Accepted Answer

An asset recorded in the books that no longer physically exists

Answer

Ghost assets are items still on the asset register that have been lost, stolen, or scrapped without proper removal from the records.

Question 4

Which metric best measures whether an asset is being utilized effectively during its operating phase?

Accepted Answer

Overall Equipment Effectiveness (OEE)

Answer

OEE combines availability, performance, and quality rate to give a comprehensive view of how productively an asset is being used.

Question 5

In a capital lease, who records the leased asset on their balance sheet?

Accepted Answer

The lessee

Answer

Under a capital (finance) lease, the lessee recognizes the asset and corresponding liability because substantially all risks and rewards transfer to the lessee.

Asset Management Practice Test

Asset Management Practice Test

Asset Management Managing Asset Lifecycles 2