Exam 6: Accounting Quality

Motor Corporation's income statements for the years ended December 31,2012 and 2011 included the following information before adjustments: On January 1,2012,Motor Corporation agreed to sell the assets and product line of one of its operating divisions for $1,600,000.The sale was consummated on December 31,2012,and it resulted in a gain on disposition of $450,000.This division's pre-tax net losses were $320,000 in 2012 an $250,000 in 2011.The income tax rate for both years was 30%. Required: Starting with operating income (before tax),prepare revised comparative income statements for 2012 and 2011 showing appropriate details for gain (loss)from discontinued operations.

When evaluating the quality of accounting information the user should consider the ____________________ of the measurements made.

Many users of financial statements believe that the quality of accounting information for intangible assets is low because firms seldom report intangible asset resources on the balance sheet.However,from the perspective of accounting quality what are arguments in favor of expensing most intangibles and not recording them on the balance sheet?

A change in the useful life of an asset is treated as a _____________