Exam 2: Asset and Liability Valuation and Income Measurement

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

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

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

Deferred tax assets and liabilities are created due to temporary differences between the tax and financial reporting basis of certain assets and liabilities. Discuss which scenarios result in a deferred tax asset and which result in deferred tax liabilities.

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

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

Firms use acquisition cost valuations and adjusted acquisition cost valuations for which of the following types of assets?

What valuation methods reflect current values? Discuss the advantage(s) and disadvantage(s) of valuing assets and liabilities using current values.

For some transactions GAAP requires that value changes are recognized on the balance sheet and the income statement when they occur, even if not realized. Discuss what types of transactions get this type of treatment and the logic behind this accounting.

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

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.

There are three valuation methods that reflect historical values: acquisition cost, adjusted acquisition cost, and present value of cash flows using historical interest rates. For each of three methods discuss what the valuation represents and provide an example of a balance sheet item that is valued using the method. In addition, for each of the three methods valuation methods explain its advantages and disadvantages.

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

Balance Sheet Equation Refer to Balance Sheet Equation. JCP Company purchased marketable securities for $5,000 during the year, at the end of the year the company revalues the securities to $5,700. This revaluation would result in an increase to non-cash assets and ____________________________________________________________.

Which of the following transactions is consistent with recognizing value changes on the balance sheet and income statement when they are realized in a market transaction

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

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

____________________ assets and liabilities represent amounts of cash a firm can expect to receive or pay in the future.

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 this type of equipment using the following schedule: year 1- 50%, year 2 - 30%, year 3 - 15% and year 4 - 5%. In 2006 Plaxo purchases a piece of equipment with a four year life and an original cost of $100,000. Discuss how this transaction will effect Plaxo's income taxes in 2006.

Which of the following valuation methods reflects current values?