Exam 2: Asset and Liability Valuation and Income Recognition

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.

Stockholders' equity can be expanded into the following three accounts: Accumulated other comprehensive income,retained earnings and _________________________________________________________________.

________________________________________ is the net amount that a firm would receive if it sold an asset or the net amount it would have to pay to settle a liability.

The difference between income tax payable and income tax expense is reported on the balance sheet as either a(n)______________________________ or a(n)_______________________________.

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?

Net income equals revenues plus ____________________ minus expenses and ____________________.

Future tax deductions:

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?

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

Shareholders' equity consists of what three components:

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

Present value methods are often used with receivables and liabilities:

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

What level are inputs for estimating fair values based on a firm's own assumptions about the fair value of an asset or a liability,such as using various data to estimate present values?

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?

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

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:

A change in the _________________________ or _________________________ will not change a preset series of cash flows,however it will change the present value of those cash flows.

The analytical framework used to evaluate transactions is reproduced below: Using this analytical framework indicate the effect of each of the following transactions for TX Corporation:

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