Question 1

Regarding actuarial assumptions,firms must disclose in notes to the financial statements all of the following except:

Accepted Answer

A)  the discount rate used to compute the pension benefit obligation. 
B)  the expected rate of return on pension investments. 
C)  estimates of the number of retirees over the future 10 years. 
D)  the rate of compensation increase. 
A)  the discount rate used to compute the pension benefit obligation. 
B)  the expected rate of return on pension investments. 
C)  estimates of the number of retirees over the future 10 years. 
D)  the rate of compensation increase.

Question 2

Analysts concerns with postretirement benefits include all of the following except:

Accepted Answer

A)  Should the underfunded postretirement benefit obligation be added to liabilities in assessing risk? 
B)  How reasonable are the firms' assumptions regarding health care cost increases? 
C)  Is the postretirement benefit fund adequately paying benefits? 
D)  Is the postretirement benefit fund generating returns consistent with the expected rate of return? 
A)  Should the underfunded postretirement benefit obligation be added to liabilities in assessing risk? 
B)  How reasonable are the firms' assumptions regarding health care cost increases? 
C)  Is the postretirement benefit fund adequately paying benefits? 
D)  Is the postretirement benefit fund generating returns consistent with the expected rate of return?

Question 3

Dividing a company's income tax expense by its book income before income taxes provides the company's ___________________________________.

Accepted Answer

The answer of Dividing a company's income tax expense by...

Question 4

Global,Inc.provides consulting services throughout the world.The company pays taxes to the nation where revenues are earned.Information about the company's taxes is presented below:
 $\begin{array}{l}
\begin{array}{lll}
\text {Global, Inc.}\
\text {Components of Income Tax Expense}\
\text { (in millions)}\
\
\text {Current - Federal}\
\text {- Foreign}\
\text {- State and Local}\
\text {Total Current}\
\text {Deferred - Federal}\
\text {- Foreign}\
\text {Total Deferred}\
\text {Total Income Tax Expense}\
\text {Components of Income before Taxes}\
\text {United States}\
\text {Foreign}\
\text {Total}\
\end{array}
\begin{array}{lll}
\
\
\
\mathbf{2 0 1 2} & \mathbf{2 0 11} \
\$ 35.60 & \$ 29.80 \
53.86 & 65.85 \
\underline{17.15} & \underline{15.28}\
\$ 106.61 & \$ 110.93 \
\$ 10.56 & \$ 8.54 \
\underline{328} &\underline{ 657}\
\$ 13.84 & \$ 15.11 \
\underline{ \$ 120.45 }& \underline{\$ 126.04} \
\mathbf{2 0 1 2} & \mathbf{2 0 11} \
\$ 155.45 & \$ 150.29 \
\underline{142.85} & \underline{134.50}\
\underline{ \$ 298.30} & \underline{\$ 284.79} 
\end{array}
\end{array}$ 
Required:
a.Using the information provided for Global,prepare the company's journal entry to record income taxes for 2012 and 2011.
b.Using the information provided for Global,determine the company's effective tax rate for 2012 and 2011.

Accepted Answer

None

Question 5

An inventory pricing procedure in which the current costs have a direct impact on the inventory is:

Accepted Answer

A)  FIFO 
B)  LIFO 
C)  Base stock 
D)  Weighted-average 
A)  FIFO 
B)  LIFO 
C)  Base stock 
D)  Weighted-average

Question 6

Which of the following is not a disclosure for derivatives required under SFAS No.133?

Accepted Answer

A)  Firms must describe their risk management strategy and how particular derivatives
Help accomplish their hedging objectives. 
B)  For fair value and cash flow hedges, firms must disclose the net gain or loss recognized
In earnings resulting from the hedges' ineffectiveness and the line item on the income statement that includes this net gain or loss. 
C)  For cash flow hedges, firms must describe the transactions or events that will result
In reclassifying gains and losses from other comprehensive income to net income
And the estimated amount of such reclassifications during the next 12 months. 
D)  The specifics of a model that simulates with a 95 percent or other confidence level the minimum, maximum, or average amount of loss that a firm would incur. 
A)  Firms must describe their risk management strategy and how particular derivatives
Help accomplish their hedging objectives. 
B)  For fair value and cash flow hedges, firms must disclose the net gain or loss recognized
In earnings resulting from the hedges' ineffectiveness and the line item on the income statement that includes this net gain or loss. 
C)  For cash flow hedges, firms must describe the transactions or events that will result
In reclassifying gains and losses from other comprehensive income to net income
And the estimated amount of such reclassifications during the next 12 months. 
D)  The specifics of a model that simulates with a 95 percent or other confidence level the minimum, maximum, or average amount of loss that a firm would incur.

Question 7

When input prices are increasing,companies that use the LIFO method of accounting for inventory will report:

Accepted Answer

A)  Lower cost of goods sold amounts in comparison to the FIFO method 
B)  Higher sales amounts in comparison to the FIFO method 
C)  Higher ending inventory amounts in comparison to the FIFO method 
D)  Lower gross profit margins in comparison to the FIFO method 
A)  Lower cost of goods sold amounts in comparison to the FIFO method 
B)  Higher sales amounts in comparison to the FIFO method 
C)  Higher ending inventory amounts in comparison to the FIFO method 
D)  Lower gross profit margins in comparison to the FIFO method

Question 8

The process of allocating the historical cost of certain assets to the periods of their use in a reasonably systematic manner is referred to as ____________________.

Accepted Answer

The answer of The process of allocating the historical cost...

Question 9

All of the following are most likely to change the FMV of pension plan assets during a given period except:

Accepted Answer

A)  Employer cash payments are made to the plan trustee. 
B)  Changes in Internal Revenue Service regulations for future tax deductible amounts of contributions. 
C)  Actual returns on invested plan assets. 
D)  Retirement benefits paid. 
A)  Employer cash payments are made to the plan trustee. 
B)  Changes in Internal Revenue Service regulations for future tax deductible amounts of contributions. 
C)  Actual returns on invested plan assets. 
D)  Retirement benefits paid.

Question 10

Deferred tax assets result in future tax ____________________ when temporary differences reverse.

Accepted Answer

The answer of Deferred tax assets result in future tax...

Question 11

A large manufacturer recently changed its cost-flow assumption method for inventories at the beginning of 2012.The manufacturer has been in operation for almost 40 years,and for the last decade,it has reported moderate growth in revenues.The firm changed from the LIFO method to the FIFO method and reported the following information:
 $\begin{array}{|l|r|r|}
\hline\text { December 31: (amounts in millions) }&2011&2012\
\hline\text { Inventories at FIFO cost } & \$ 388.1 & \$ 419.7 \
\hline \text { Excess of FIFO cost over LIFO cost } & (229.0) & (210.4) \
\hline \text { Cost of goods sold (FIFO) } & & \$ 2,050.8 \
\hline \text { Cost of goods sold (LIFO) } & & \$ 2,417.1\
\hline
\end{array}$ 
Calculate the inventory turnover ratio for 2012 using the LIFO and FIFO cost-flow assumption methods.Explain why the costs assigned to inventory under LIFO at the end of 2011 and 2012 are so much less than they are under FIFO.

Accepted Answer

LIFO and FIFO Cost-Flow Assumption for I

Question 12

The _____________________________________________ is equal to the actuarial present value of amounts that the employer expects to pay to retired employees,based on the employees' service to date and using expected future salary amounts.

Accepted Answer

projected

Question 13

A LIFO liquidation during periods when prices are increasing results in a company:

Accepted Answer

A)  recording a large inventory write down. 
B)  recording higher earnings than it would have if it had used FIFO. 
C)  recording lower earnings than it would have if it had used FIFO. 
D)  having operational problems, but no financial statement effects. 
A)  recording a large inventory write down. 
B)  recording higher earnings than it would have if it had used FIFO. 
C)  recording lower earnings than it would have if it had used FIFO. 
D)  having operational problems, but no financial statement effects.

Question 14

Typical U.S.GAAP disclosures for deferred income taxes include all of the following except:

Accepted Answer

A)  Components of income tax expense 
B)  Components of income before taxes 
C)  Reconciliation of income taxes at statutory rate with income tax expense 
D)  Components of permanent tax differences 
A)  Components of income tax expense 
B)  Components of income before taxes 
C)  Reconciliation of income taxes at statutory rate with income tax expense 
D)  Components of permanent tax differences

Question 15

Which of the following calculations is used to determine the amount of the liability reported on the balance sheet for underfunding?

Accepted Answer

A)  Plan assets less projected benefit obligation. 
B)  Projected benefit obligation less plan assets. 
C)  Plan assets less accumulated benefit obligation. 
D)  Accumulated benefit obligation less plan assets. 
A)  Plan assets less projected benefit obligation. 
B)  Projected benefit obligation less plan assets. 
C)  Plan assets less accumulated benefit obligation. 
D)  Accumulated benefit obligation less plan assets.

Question 16

A company that uses LIFO will find that its ______________________________ account will be somewhat out of date.

Accepted Answer

The answer of A company that uses LIFO will find...

Question 17

What are the four disclosures required by U.S.GAAP relating to income taxes?

Accepted Answer

1)Components of the provision for income

Question 18

The projected benefit obligation measures:

Accepted Answer

A)  the pension obligation on the basis of the plan formula applied to years of service to date and based on existing salary levels. 
B)  an estimated total benefit at retirement and then computes the level cost that will be sufficient, together with interest expected to accumulate at the assumed rate, to provide the total benefits at retirement. 
C)  the pension obligation on the basis of the plan formula applied to years of service to date and based on future salary levels. 
D)  the shortest possible period for funding to maximize the tax deduction. 
A)  the pension obligation on the basis of the plan formula applied to years of service to date and based on existing salary levels. 
B)  an estimated total benefit at retirement and then computes the level cost that will be sufficient, together with interest expected to accumulate at the assumed rate, to provide the total benefits at retirement. 
C)  the pension obligation on the basis of the plan formula applied to years of service to date and based on future salary levels. 
D)  the shortest possible period for funding to maximize the tax deduction.

Question 19

Although LIFO generally provides higher quality earnings measures,FIFO generally provides higher _____________________________________________ measures.

Accepted Answer

quality fi

Question 20

Assume that Madison Corp.has agreed to construct a new basketball arena for Gator Town for $70 million dollars.Construction of the new arena begins in July,2012 and is expected to be completed in March 2009.At the signing of the contract Madison Corp.estimates that the new arena will cost $60 million dollars to build.Given the following cost and building schedule determine the cumulative degree of completion and how much revenue and gross margin Madison Corp.should recognize in years 2012,2013 and 2014.
 $\begin{array} { l l l } 
& \text { Casts incurred } & \text { Estimated casts } \
\text { Year }  & \text { to date } & \text { remainine } \
2012& \$ 18,000,000 & \$ 42,000,000 \
2013 & \$ 48,000,000 & \$ 12,000,000\
2014 &\$ 600.000&\$0\
\end{array}$

Accepted Answer

None

Regarding actuarial assumptions,firms must disclose in notes to the financial statements all of the following except:

Analysts concerns with postretirement benefits include all of the following except:

Dividing a company's income tax expense by its book income before income taxes provides the company's ___________________________________.

An inventory pricing procedure in which the current costs have a direct impact on the inventory is:

Which of the following is not a disclosure for derivatives required under SFAS No.133?

When input prices are increasing,companies that use the LIFO method of accounting for inventory will report:

The process of allocating the historical cost of certain assets to the periods of their use in a reasonably systematic manner is referred to as ____________________.

All of the following are most likely to change the FMV of pension plan assets during a given period except:

Deferred tax assets result in future tax ____________________ when temporary differences reverse.

The _____________________________________________ is equal to the actuarial present value of amounts that the employer expects to pay to retired employees,based on the employees' service to date and using expected future salary amounts.

A LIFO liquidation during periods when prices are increasing results in a company:

Typical U.S.GAAP disclosures for deferred income taxes include all of the following except:

Which of the following calculations is used to determine the amount of the liability reported on the balance sheet for underfunding?

A company that uses LIFO will find that its ______________________________ account will be somewhat out of date.

What are the four disclosures required by U.S.GAAP relating to income taxes?

The projected benefit obligation measures:

Although LIFO generally provides higher quality earnings measures,FIFO generally provides higher _____________________________________________ measures.

Overview of Financial Reporting, Financial Statement Analysis, and Valuation

Asset and Liability Valuation and Income Recognition

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

Profitability Analysis

Risk Analysis

Accounting Quality

Financing Activities

Investing 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 9: Operating Activities

Regarding actuarial assumptions,firms must disclose in notes to the financial statements all of the following except:

Analysts concerns with postretirement benefits include all of the following except:

Dividing a company's income tax expense by its book income before income taxes provides the company's ___________________________________.

An inventory pricing procedure in which the current costs have a direct impact on the inventory is:

Which of the following is not a disclosure for derivatives required under SFAS No.133?

When input prices are increasing,companies that use the LIFO method of accounting for inventory will report:

The process of allocating the historical cost of certain assets to the periods of their use in a reasonably systematic manner is referred to as ____________________.

All of the following are most likely to change the FMV of pension plan assets during a given period except:

Deferred tax assets result in future tax ____________________ when temporary differences reverse.

The _____________________________________________ is equal to the actuarial present value of amounts that the employer expects to pay to retired employees,based on the employees' service to date and using expected future salary amounts.

A LIFO liquidation during periods when prices are increasing results in a company:

Typical U.S.GAAP disclosures for deferred income taxes include all of the following except:

Which of the following calculations is used to determine the amount of the liability reported on the balance sheet for underfunding?

A company that uses LIFO will find that its ______________________________ account will be somewhat out of date.

What are the four disclosures required by U.S.GAAP relating to income taxes?

The projected benefit obligation measures:

Although LIFO generally provides higher quality earnings measures,FIFO generally provides higher _____________________________________________ measures.

Overview of Financial Reporting, Financial Statement Analysis, and Valuation

Asset and Liability Valuation and Income Recognition

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

Profitability Analysis

Risk Analysis

Accounting Quality

Financing Activities

Investing 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