Solved by verified expert :11. The traditional accounting model delays the recognition of value
changes of assets and liabilities until what event occurs?
a.
A change in value.
b.
A market
transaction.
c.
A balance sheet
date.
d.
Cash is received or
cash is paid.
12. Fish Farm Corporation purchases a new tract of land on which it is
going to build new growing and holding tanks in order to expand its business.
Which of the following costs would not be part of the cost of the land?
a.
costs to run a
title search
b.
costs of grading to
level the land
c.
costs of tearing
down an existing structure
d.
cost of the new
holding tanks
13. Current replacement cost represents
a.
the amount a firm
would have to pay currently to acquire an asset it now holds
b.
the amount a firm
would have to pay currently to acquire an asset it does not now hold
c.
the amount a firm
would have to pay in the future to acquire an asset it now holds
d.
the amount a firm
would have to pay to purchase a comparably depreciated version of the asset
it now holds
14. Which of the following is not one of methods used by GAAP
for treating value changes?
a.
Recognize value
changes on the balance sheet and income statement when they are realized in a
market transaction
b.
Recognize value
changes in the income statement when the value changes occur over time, but
recognize them on the balance sheet when they are realized in a market
transaction
c.
Recognize value
changes on the balance sheet when the value changes occur over time, but
recognize them in the income statement when they are realized in a market
transaction
d.
Recognize value
changes on the balance sheet and income statement when they occur over time,
even though they are not realized in a market transaction
15. 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?
a.
Selling land at a
cost greater than its original purchase price.
b.
Recording an
increase in the fair value of investments at year end.
c.
Translating foreign
operations accounted for in Yen back to U.S. dollars in order to prepare
consolidated financial statements.
d.
Writing down the
value of an asset due to obsolescent.
16. At origination which of the following temporary differences would
create a deferred tax asset?
a.
Tax basis of an
asset exceeds its financial reporting basis.
b.
Tax basis of a
liability exceeds its financial reporting basis.
c.
Financial reporting
basis of an asset is equal to its tax basis.
d.
Financial reporting
basis of an asset exceeds its tax basis.
17. 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?
a.
Deferred tax asset
of $25,000.
b.
Deferred tax
liability of $25,000.
c.
Deferred tax asset
of $8,750.
d.
Deferred tax
liability of $8,750.
18. The income statement approach to measuring income tax expense
a.
is required by FASB
Statement No. 109.
b.
compares revenues
and expenses recognized for book and tax purposes, eliminates permanent
differences, and computes income tax expense based on book income before
taxes excluding permanent differences.
c.
computes income tax
expense as a difference between the tax basis of an asset or a liability and
its reported amount in the [balance sheet] that will result in taxable or
deductible amounts in some future year(s) when the reported amounts of assets
are recovered and the reported amounts of liabilities are settled.
d.
is required by IAS 12.
19. Future tax deductions
a.
result in deferred
tax assets.
b.
result in deferred
tax liabilities.
c.
occur where the tax
basis of liabilities is more than the financial reporting basis.
d.
occur where the tax
basis of assets is less than financial reporting basis.
20. Future taxable income is characteristic of all of the following
situations except:
a.
where deferred tax
assets result.
b.
where deferred tax
liabilities result.
c.
where the tax basis
of liabilities exceed the financial reporting basis.
d.
where the tax basis
of assets is less than financial reporting basis.
