Question 1

Which of the following valuation methods reflects current values?

Accepted Answer

A)  acquisition cost 
B)  present value of cash flows using historical interest rates 
C)  net realizable value 
D)  adjusted acquisition cost 
A)  acquisition cost 
B)  present value of cash flows using historical interest rates 
C)  net realizable value 
D)  adjusted acquisition cost

Question 2

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?

Accepted Answer

A)  Deferred tax asset of $25,000. 
B)  Deferred tax liability of $25,000. 
C)  Deferred tax asset of $8,750. 
D)  Deferred tax liability of $8,750. 
A)  Deferred tax asset of $25,000. 
B)  Deferred tax liability of $25,000. 
C)  Deferred tax asset of $8,750. 
D)  Deferred tax liability of $8,750.

Question 3

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:

Accepted Answer

A)  Discontinued Operations 
B)  Extraordinary Items 
C)  Other Comprehensive Income 
D)  Common Stock 
A)  Discontinued Operations 
B)  Extraordinary Items 
C)  Other Comprehensive Income 
D)  Common Stock

Question 4

If a portfolio manager had to estimate the fair value of investments in timber,which of the following would he/she most likely identify as the level of inputs to determine this?

Accepted Answer

A)  Level 1. 
B)  Levels 1 and 2. 
C)  Levels 2 or 3. 
D)  All levels would be applicable. 
A)  Level 1. 
B)  Levels 1 and 2. 
C)  Levels 2 or 3. 
D)  All levels would be applicable.

Question 5

Interest on Municipal Bonds represents what kind of tax difference?

Accepted Answer

A)  Permanent timing difference that results in that income item not being taxed. 
B)  Temporary difference that will reversed in the future 
C)  Tax rate on Municipal bonds are based on estimated tax rates. 
D)  Not recognized in taxable income on the accrual basis of accounting. 
A)  Permanent timing difference that results in that income item not being taxed. 
B)  Temporary difference that will reversed in the future 
C)  Tax rate on Municipal bonds are based on estimated tax rates. 
D)  Not recognized in taxable income on the accrual basis of accounting.

Question 6

What level are inputs for estimating fair values are those inputs include quoted prices for similar assets or liabilities in active or inactive markets,other observable information such as yield curves and price indexes,and other observable data such as market-based correlation estimates?

Accepted Answer

A)  Level 1. 
B)  Level 2. 
C)  Level 3. 
D)  None of these. 
A)  Level 1. 
B)  Level 2. 
C)  Level 3. 
D)  None of these.

Question 7

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

Accepted Answer

The answer of Firms recognize the reduction in service potential...

Question 8

Relevant asset valuations refer to all of the following except:

Accepted Answer

A)  they are timely. 
B)  they have the capacity to affect a user's decisions, based on the information. 
C)  they incorporate all available information. 
D)  they are always subjective. 
A)  they are timely. 
B)  they have the capacity to affect a user's decisions, based on the information. 
C)  they incorporate all available information. 
D)  they are always subjective.

Question 9

Future taxable income is characteristic of all of the following situations except:

Accepted Answer

A)  where deferred tax assets result. 
B)  where deferred tax liabilities result. 
C)  where the tax basis of liabilities exceed the financial reporting basis. 
D)  where the tax basis of assets is less than financial reporting basis. 
A)  where deferred tax assets result. 
B)  where deferred tax liabilities result. 
C)  where the tax basis of liabilities exceed the financial reporting basis. 
D)  where the tax basis of assets is less than financial reporting basis.

Question 10

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.

Accepted Answer

H.Solo should record the equipment at th

Question 11

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

Accepted Answer

A)  Recognize value changes on the balance sheet and income statement when they are realized in a market transaction 
B)  Recognize value changes in the income statement when the value changes occur over time, but recognize them on the balance sheet when they are realized in a market transaction 
C)  Recognize value changes on the balance sheet when the value changes occur over time, but recognize them in the income statement when they are realized in a market transaction 
D)  Recognize value changes on the balance sheet and income statement when they occur over time, even though they are not realized in a market transaction 
A)  Recognize value changes on the balance sheet and income statement when they are realized in a market transaction 
B)  Recognize value changes in the income statement when the value changes occur over time, but recognize them on the balance sheet when they are realized in a market transaction 
C)  Recognize value changes on the balance sheet when the value changes occur over time, but recognize them in the income statement when they are realized in a market transaction 
D)  Recognize value changes on the balance sheet and income statement when they occur over time, even though they are not realized in a market transaction

Question 12

The amount initially paid to acquire an asset is called ______________________________.

Accepted Answer

The answer of The amount initially paid to acquire an...

Question 13

At origination which of the following temporary differences would create a deferred tax asset?

Accepted Answer

A)  Tax basis of an asset exceeds its financial reporting basis. 
B)  Tax basis of a liability exceeds its financial reporting basis. 
C)  Financial reporting basis of an asset is equal to its tax basis. 
D)  Financial reporting basis of an asset exceeds its tax basis. 
A)  Tax basis of an asset exceeds its financial reporting basis. 
B)  Tax basis of a liability exceeds its financial reporting basis. 
C)  Financial reporting basis of an asset is equal to its tax basis. 
D)  Financial reporting basis of an asset exceeds its tax basis.

Question 14

The income statement approach to measuring income tax expense

Accepted Answer

A)  is required by FASB Statement No. 109. 
B)  compares revenues and expenses recognized for book and tax purposes, eliminates permanent differences, and computes income tax expense based on book income before taxes excluding permanent differences. 
C)  computes income tax expense as a difference between the tax basis of an asset or a liability and its reported amount in the [balance sheet] that will result in taxable or deductible amounts in some future year(s) when the reported amounts of assets are recovered and the reported amounts of liabilities are settled. 
D)  is required by IAS 12. 
A)  is required by FASB Statement No. 109. 
B)  compares revenues and expenses recognized for book and tax purposes, eliminates permanent differences, and computes income tax expense based on book income before taxes excluding permanent differences. 
C)  computes income tax expense as a difference between the tax basis of an asset or a liability and its reported amount in the [balance sheet] that will result in taxable or deductible amounts in some future year(s) when the reported amounts of assets are recovered and the reported amounts of liabilities are settled. 
D)  is required by IAS 12.

Question 15

U.S.GAAP,IFRS,and other major accounting standards are best characterized as

Accepted Answer

A)  historical accounting models. 
B)  current value accounting models. 
C)  acquisition cost accounting models. 
D)  mixed attribute accounting models. 
A)  historical accounting models. 
B)  current value accounting models. 
C)  acquisition cost accounting models. 
D)  mixed attribute accounting models.

Question 16

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

Accepted Answer

The answer of Acquisition costs includes all costs necessary to...

Question 17

The following problem requires present value information:
Biotech sold a patent on a new blood analyzer to Pharma.The sales agreement which was signed on January 1,2009 requires Pharma to pay Biotech $1 million immediately.In addition,Pharma is required to pay $700,000 each December 31 for 20 years starting with December 31,2009.Pharma and Biotech judge that a 10 percent is an appropriate interest rate for this arrangement.
a.Compute the present value of the receivable on Biotech's books on January 1,2009 immediately after receiving the $1 million down payment.
b.Compute the present value of the receivable on Biotech's books on December 31,2009.
c.Compute the present value of the receivable on Biotech's books on December 31,2010.

Accepted Answer

Jan.1 2009:
The present value of an ordi

Question 18

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:

Accepted Answer

A)  where historical cost is used for accounts receivable, fixed assets, and other assets with values that remain relatively stable. 
B)  where market value is used for marketable equity securities, commodities, and financial assets are traded in liquid markets 
C)  where historical cost is used for LIFO inventory layers where inventory has seen an inflationary increase in costs. 
D)  where historical cost is used for internally generated intangible asset valuations. 
A)  where historical cost is used for accounts receivable, fixed assets, and other assets with values that remain relatively stable. 
B)  where market value is used for marketable equity securities, commodities, and financial assets are traded in liquid markets 
C)  where historical cost is used for LIFO inventory layers where inventory has seen an inflationary increase in costs. 
D)  where historical cost is used for internally generated intangible asset valuations.

Question 19

What valuation methods reflect historical cost? Discuss the advantages and disadvantages of valuing assets and liabilities using historical valuations.

Accepted Answer

Valuation methods reflecting historical

Question 20

Net income equals revenues plus ____________________ minus expenses and ____________________.

Accepted Answer

The answer of Net income equals revenues plus ____________________ minus...

Which of the following valuation methods reflects current values?

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:

If a portfolio manager had to estimate the fair value of investments in timber,which of the following would he/she most likely identify as the level of inputs to determine this?

Interest on Municipal Bonds represents what kind of tax difference?

What level are inputs for estimating fair values are those inputs include quoted prices for similar assets or liabilities in active or inactive markets,other observable information such as yield curves and price indexes,and other observable data such as market-based correlation estimates?

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

Relevant asset valuations refer to all of the following except:

Future taxable income is characteristic of all of the following situations except:

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

The amount initially paid to acquire an asset is called ______________________________.

At origination which of the following temporary differences would create a deferred tax asset?

The income statement approach to measuring income tax expense

U.S.GAAP,IFRS,and other major accounting standards are best characterized as

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

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:

What valuation methods reflect historical cost? Discuss the advantages and disadvantages of valuing assets and liabilities using historical valuations.

Net income equals revenues plus minus expenses and .

Overview of Financial Reporting, financial Statement Analysis, and Valuation

Income Flows Versus Cash Flows: Understanding the Statement of Cash Flows

Profitability Analysis

Risk Analysis

Accounting Quality

Financing Activities

Investing Activities

Operating Activities

Forecasting Financial Statements

Risk-Adjusted Expected Rates of Return and the Dividends Valuation Approach

Valuation: Cash-Flow-Based Approaches

Valuation: Earnings-Based Approaches

Valuation: Market-Based Approaches

Filters

Exam 2: Asset and Liability Valuation and Income Measurement

Which of the following valuation methods reflects current values?

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:

If a portfolio manager had to estimate the fair value of investments in timber,which of the following would he/she most likely identify as the level of inputs to determine this?

Interest on Municipal Bonds represents what kind of tax difference?

What level are inputs for estimating fair values are those inputs include quoted prices for similar assets or liabilities in active or inactive markets,other observable information such as yield curves and price indexes,and other observable data such as market-based correlation estimates?

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

Relevant asset valuations refer to all of the following except:

Future taxable income is characteristic of all of the following situations except:

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

The amount initially paid to acquire an asset is called ______________________________.

At origination which of the following temporary differences would create a deferred tax asset?

The income statement approach to measuring income tax expense

U.S.GAAP,IFRS,and other major accounting standards are best characterized as

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

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:

What valuation methods reflect historical cost? Discuss the advantages and disadvantages of valuing assets and liabilities using historical valuations.

Net income equals revenues plus ____________________ minus expenses and ____________________.

Overview of Financial Reporting, financial Statement Analysis, and Valuation

Income Flows Versus Cash Flows: Understanding the Statement of Cash Flows

Profitability Analysis

Risk Analysis

Accounting Quality

Financing Activities

Investing Activities

Operating Activities

Forecasting Financial Statements

Risk-Adjusted Expected Rates of Return and the Dividends Valuation Approach

Valuation: Cash-Flow-Based Approaches

Valuation: Earnings-Based Approaches

Valuation: Market-Based Approaches

Filters

Net income equals revenues plus minus expenses and .