Exam 2: Asset and Liability Valuation and Income Measurement

If a portfolio manager had to estimate the fair value of privately placed bond issues,which of the following would he/she most likely identify as the level of inputs to determine this?

Historical costs include all of the following except:

Accord Inc.income tax return shows taxes currently payable for 2011 of $85,000.The company reported deferred tax assets of $35,000 at the end of 2010 and $24,000 at the end of 2011.Accord reported deferred tax liabilities of $48,000 at the end of 2011 and $54,000 at the end of 2011. Determine the amount of income tax expense reported by Accord for 2011.

Disregarding cash flows with owners,over sufficiently long periods of time,net income equals:

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?

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

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:

When income tax expense for a period is greater than income tax payable the difference will be reported how and on which financial statement?

Which of the following assets appears on the balance sheet at fair value?

Why might income tax expense on the income statement differ from actual income taxes paid to the government?

Discuss the three ways in which GAAP allows value changes to be treated in the financial statements.Provide an example of each value change treatment.

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 2010 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?

If a portfolio manager had to estimate the fair value of private equity funds invested in a young,privately-held start-up company,which of the following would he/she most likely identify as the level of inputs to determine this?

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:

Discuss the two principal reasons income before taxes for financial reporting differs from taxable income.

On December 31,2009,Loran Corporation reported a deferred tax liability totaling $12,000,resulting from depreciation timing differences pertaining to a depreciable asset purchased during 2009.Loran uses straight-line depreciation over four years for GAAP (book)purposes; for tax purposes,the depreciation deduction is 40% of cost during 2009,30% of cost during 2010,20% of cost during 2011,and 10% of cost during 2012.During 2010,Loran expensed $75,000 of warranty costs that will be deducted for tax purposes in future years.Loran also accrued revenue totaling $150,000 which is taxable in 2011.Loran's GAAP (book)income before taxes during 2010 totaled $397,700.The marginal income tax rate is 40% for all years. Required: (1)What is the taxable income? (2)Prepare the journal entry to record income tax expense for the year ended December 31,2010.

The net amount a firm would receive if it sold an asset or the net amount it would pay to settle a liability is referred to as

Stockholders' equity can be expanded into the following three accounts: contributed capital,retained earnings and _________________________________________________________________.

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

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