Exam 2: Asset and Liability Valuation and Income Recognition

Items, such as interest revenue on municipal bond holdings, that do not affect taxable income or income taxes paid in any year are referred to as _____________________________________________.

All of the following can be used to describe reliability of accounting information except :

Acquisition costs includes all costs necessary to get an asset ready for its _________________________.

Which of the following is not one of methods used by GAAP for treating value changes?

The analytical framework used to evaluate transactions is reproduced below: Using this analytical framework indicate the effect of each of the following transactions for TX Corporation: 1. TX Corporation sold additional shares of common stock for $250,000 cash. 2. At the end of the period TX Corporation revalued the securities to $125,000. 3.During the next period TX Corporation sells equipment with a book value of $100,000 for $90,000.

Interest on Municipal Bonds represents what kind of tax difference?

Reporting financial assets and liabilities at fair values also is referred to as:

Firms recognize the reduction in service potential of assets such as patents and trademarks using the process of ____________________.

When recognizing deferred tax assets and liabilities, the income statement approach and the balance sheet approach yield identical results:

Firms may not include all income taxes for a period on the line for income tax expense in the income statement. Other places that income tax expenses may occur include all of the following except :

Which of the following would not represent an acquisition cost to be added to the purchase price of building:

H. Solo Company purchased a new piece of equipment with a list price of $175,000 and subject to a 5 percent discount if paid within 45 days. H. Solo paid within the discount period. The company also paid $1,500 to obtain title to the equipment and $600 as the license fee for the first year of operation. It paid $2,500 to level the area in which the equipment would be located and $12,500 to relocate other equipment that would have interfered with the proper operation of the new equipment. H. Solo paid $400 for property and liability insurance for the first year of operation. What is the acquisition cost of this equipment that H. Solo should record in its accounting records? Indicate the treatment of any amount not included in acquisition cost.

If a portfolio manager had to estimate the fair value of illiquid mortgage-backed securities, which of the following would he/she most likely identify as the level of inputs to determine this?

Plaxo Corporation has a tax rate of 35% and uses the straight-line method of depreciation for its equipment, which has a useful life of four years. Tax legislation requires the company to depreciate its equipment using the following schedule: year 1- 50%, year 2 - 30%, year 3 - 15% and year 4 - 5%. In 2014 Plaxo purchases a piece of equipment with a four year life and an original cost of $100,000. What amount will Plaxo record as a deferred tax asset or liability in 2010?

The existence of subjectivity in an asset valuation does not necessarily mean the valuation will not be reliable. All of the following are examples of this except :

Fish Farm Corporation purchases a new tract of land on which it is going to build new growing and holding tanks in order to expand its business. Which of the following costs would not be part of the cost of the land?

The amount that a company would have to pay today to acquire an asset it now holds is called ________________________________________.

Relevant asset valuations refer to all of the following except :

The difference between income tax payable and income tax expense is reported on the balance sheet as either a(n) ______________________________ or a(n) _______________________________.

Which of the following assets appears on the balance sheet at Historical cost?