Which of These Management Actions Might Be Considered Under the Efficient

Multiple Choice

Which of these management actions might be considered under the efficient contracting perspective?

A) A manger chooses to use FIFO instead of the weighted average cost of inventory because she believes that FIFO better reflects the value of the inventory on hand
B) A manager depreciates an asset using the reducing balance method rather than the straight-line method because he believes that the method better reflects the economic consumption of the asset.
C) A manager uses the straight-line method of depreciation rather than reducing balance to prevent a temporary breach of a debt covenant,even though the chosen method does not best reflect the asset's underlying economic consumption.
D) All of the above might be considered