Solved by a verified expert :Question 1
The basic issue in deciding whether to record a valuation
allowance for a deferred tax asset is if probable taxable income is anticipated
to be insufficient to realize the tax benefit.
True
False
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Question 2
Capital leases are agreements that are formulated outwardly
as leases, but are installment purchases in substance.
True
False
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Question 3
In addition to the criteria that must be met by the lessee,
the lessor must meet additional conditions for classification as a capital
lease to satisfy revenue recognition criteria.
True
False
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Question 4
Pension expense is decreased by:
Amortization of prior service cost.
Amortization of net gain.
Benefits paid to retired employees.
Prior service cost.
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Question 5
Recording a sales-type lease is similar to recording:
A purchase on account.
An exchange of assets.
A sale of a fixed asset.
A sale of merchandise on account.
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Question 6
Changes in enacted tax rates that do not become effective in
the current period affect deferred tax accounts only after the new rates take
effect.
True
False
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Question 7
The attribution period for postretirement health care plans
does not include:
The first five years of service.
The year of hire.
The employee probation period.
The years of service beyond the full eligibility date.
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Question 8
The valuation allowance account that is used in conjunction
with deferred tax assets is a(n):
Liability.
Component of shareholders’ equity.
Asset.
Contra asset.
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Question 9
J Corp. entered into an operating lease in February. The
company’s December 31 statement of cash flows will report:
A cash outflow from investing activities.
A cash outflow from financing activities.
A cash outflow from operating activities.
No cash outflow.
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Question 10
A guaranteed residual value at the inception of a capital
lease should be:
Excluded from minimum lease payments.
Included as part of minimum lease payments at present value.
Included as part of minimum lease payments at future value.
Included as part of minimum lease payments only to the
extent that guaranteed residual value is expected to exceed estimated residual
value.
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Question 11
The expected postretirement benefit obligation (EPBO) is the
discounted present value of the total benefits expected to be paid by the
employer to the plan participants.
True
False
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Question 12
Under current tax law, generally a net operating loss may be
carried back:
2 years.
5 years.
15 years.
20 years.
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Question 13
We classify a lease as a Type A lease if:
the present value of lease payments is less than the asset’s
book value.
the present value of lease payments is less than the asset’s
fair value.
the usual risks and rewards are transferred to the lessee.
the usual risks and rewards are retained by the lessor.
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Question 14
A deferred tax asset represents the tax effect of the
temporary difference between the financial carrying value of an asset or
liability and its tax basis.
True
False
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Question 15
Which of the following causes a permanent difference between
taxable income and pretax accounting income?
The installment method used for sales of property.
MACRS depreciation method used for equipment.
Interest income on municipal bonds.
Percentage-of-completion method for long-term construction
contracts.
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Question 16
A bargain purchase option is defined as the option of
purchasing leased property at a price that is equal to the expected fair value
of a leased asset.
True
False
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Question 17
How are deferred tax assets and deferred tax liabilities
reported in a classified balance sheet?
Provide a sample balance sheet showing how these items are reported.
Path: pWords:0
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Answer
Question 18
Differentiate between a defined contribution pension plan
and a defined benefit pension plan.
Provide the advantages and disadvantages of each a) to the employee and
b) to the company as part of your answer.
