Question 1

Differences between income before taxes and taxable income are either ____________________ or ____________________.

Accepted Answer

permanent,temporary temporary,permanent

Question 2

A company that uses FIFO will find that its ___________________________________ account tends to be somewhat out of date.

Accepted Answer

cost of goods sold

Question 3

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. B

Question 4

Which of the following is not one of the GAAP classifications for derivatives?

Accepted Answer

A)  Speculative investment 
B)  Fair value hedge 
C)  Asset-Liability hedge 
D)  Cash flow hedge 
A)  Speculative investment 
B)  Fair value hedge 
C)  Asset-Liability hedge 
D)  Cash flow hedge

Question 5

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 6

When cash collectibility is uncertain the ___________________________________ method matches the costs of generating revenues dollar for dollar with cash receipts until the firm recovers all such costs.

Accepted Answer

The answer of When cash collectibility is uncertain the ___________________________________...

Question 7

To calculate a company's average tax rate an analyst would

Accepted Answer

A)  Divide income tax payable by income before taxes 
B)  Divide income tax expense by income before taxes 
C)  Multiply the statutory income tax rate by income before tax 
D)  Average a firm's Federal, State, Local and Foreign tax rates. 
A)  Divide income tax payable by income before taxes 
B)  Divide income tax expense by income before taxes 
C)  Multiply the statutory income tax rate by income before tax 
D)  Average a firm's Federal, State, Local and Foreign tax rates.

Question 8

Falcon Networks Falcon Networks is a leading semiconductor company with operations in 17 different countries.Information about the company's taxes appears below:
  Using the information provided by Falcon Networks determine the foreign effective tax rate for 2012.

Accepted Answer

A)  33.52% 
B)  35.00% 
C)  42.25% 
D)  45.49% 
A)  33.52% 
B)  35.00% 
C)  42.25% 
D)  45.49%

Question 9

A company that uses LIFO will experience a ______________________________ during a period it sells more units than it purchases.

Accepted Answer

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

Question 10

If the portions of the firm's foreign operations in higher-tax-rate countries grew more rapidly than foreign operations in lower-tax-rate countries,the company may seek out more tax effective ways of operating abroad through all of the following means except:

Accepted Answer

A)  Assess whether transfer prices or cost allocations can be adjusted to shift income from high-tax-rate to low-tax-rate jurisdictions. 
B)  Shift from domestic to foreign borrowing to increase deductions for interest against foreign-source income. 
C)  Shift from debt to equity financing of foreign operations to increase interest deductions against foreign-source income. 
D)  Shift some operations, like marketing, to the United States where the average tax rate is lower. 
A)  Assess whether transfer prices or cost allocations can be adjusted to shift income from high-tax-rate to low-tax-rate jurisdictions. 
B)  Shift from domestic to foreign borrowing to increase deductions for interest against foreign-source income. 
C)  Shift from debt to equity financing of foreign operations to increase interest deductions against foreign-source income. 
D)  Shift some operations, like marketing, to the United States where the average tax rate is lower.

Question 11

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 12

Firm A places its order for the equipment on June 30,Year 1.It simultaneously signs a forward foreign exchange contract for 20,000 GBP.The forward rate on June 30,Year 1,for settlement on June 30,Year 2,is $1.64 per GBP.Firm A designates the forward foreign exchange contract as a fair value hedge of the firm commitment.
Required
a.U.S.GAAP and IFRS do not require Firm A to record the purchase commitment or the
forward foreign exchange contract on the balance sheet as a liability and an asset on
June 30,Year 1.What is the logic for this accounting?
b.On December 31,Year 1,the forward foreign exchange rate for settlement on June
30,Year 2,is $1.73 per GBP.Using the financial statement effects template,show the
financial statement effects of recording the change in the value of the purchase commitment
and the change in the value of the forward contract for Year 1.Assume an 8 percent per year interest rate for discounting cash flows to their present values on December 31,Year 1.
c.Show the financial statement effects on June 30,Year 2,of recording the change in the present value of the purchase commitment and the forward foreign exchange contract for the passage of time.
d.On June 30,Year 2,the spot foreign exchange rate is $1.75 per GBP.Show the financial
statement effects of recording the change in the value of the purchase commitment and the change in the value of the forward contract due to changes in the exchange rate during the first six months of Year 2.
e.Show the financial statement effects of the June 30,Year 2,purchase of 20,000 GBP with U.S.dollars and acquisition of the equipment.
f.Show the financial statement effects on June 30,Year 2,to settle the forward foreign
exchange contract.
g.How would the effects in Parts b-f differ if Firm A had chosen to designate the forward
foreign exchange contract as a cash flow hedge instead of a fair value hedge?
h.Suggest a scenario that would justify Firm A treating the forward foreign exchange contract as a fair value hedge and a scenario that would justify the firm treating the
contract as a cash flow hedge.

Accepted Answer

a.The purchase commitment and the forwar

Question 13

Accountants use reserve accounts for various reasons,for each of the scenarios below describe a specific account example that matches the scenario.
1.The use of a reserve account in order to match expense with revenues.
2.The use of a reserve account in order to keep expense out of the income statement.
3.The use of a reserve account in order to revalue an asset,but delay the income recognition effect.

Accepted Answer

Some possible answers from Chapter 8 of

Question 14

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 15

Presented below is pension information related to Power Corp.for the year 2012:   The amount of pension expense to be reported for 2012 is

Accepted Answer

A)  $36,000 
B)  $48,000 
C)  $54,000 
D)  $40,000 
A)  $36,000 
B)  $48,000 
C)  $54,000 
D)  $40,000

Question 16

Cooke Industries imports and sells quality merchandise.The company had the following layers in its LIFO inventory at January 1,2012,at which time the replacement cost of the inventory was $600 per unit.
   The replacement cost of the merchandise remained constant throughout 2012.Cooke sold 300 units during 2012.The company established the selling price of each unit by doubling its replacement cost at the time of sale.
Required:
1.Determine the gross margin and the gross margin percentage for 2012 assuming that Cooke purchased 310 units during the year.
2.Determine the gross margin and the gross margin percentage for 2012 assuming that Cooke purchased 200 units during the year.
3.Explain why the assumed number of units purchased makes a difference in your answers.

Accepted Answer

1.
 @#IMG-DLM& 2.
 @#IMG-DLM& 
3.
When prices are rising,sel

Question 17

Parnell Industries Parnell Industries sold a copy machine to Ranger Inc.on January 1,2012.The sale price of the machine was $4,000,000 and the machine cost $3,200,000 for Parnell to manufacture.Ranger will make four payments at the end of each year,beginning with 2012,of $1,261,883 each.The four payments of $1,261,883 when discounted at 10% have a present value of $4,000,000.An amortization table appears below:
  If Parnell Industries is uncertain that it will collect all four payments from Ranger Inc.and uses the installment method of accounting for revenue recognition what amount of gross profit should Parnell recognize in 2012 from the sale?

Accepted Answer

A)  $0 
B)  $861,883 
C)  $172,377 
D)  $800,000 
A)  $0 
B)  $861,883 
C)  $172,377 
D)  $800,000

Question 18

Under the accrual method of accounting when a firm has substantially completed its value-adding activities it should recognize ____________________.

Accepted Answer

The answer of Under the accrual method of accounting when...

Question 19

Please answer the following questions about defined benefit pension plans:
1.Companies with defined benefit pension plans must recognize pension expense each period.What are the five components of pension expense? Briefly describe each component.
2.How does each component of pension expense effect pension expense during the period (increase,decrease,or uncertain)?
3.What is the difference between the accumulated pension obligation and the projected pension obligation?
4.What determines whether a pension plan is underfunded or overfunded?

Accepted Answer

The answer of Please answer the following questions about defined...

Question 20

The following information is related to the defined benefit pension plan of Xavier Company for 2012:
   Required:
1.Using the above information calculate pension expense for 2012?
2.Will it be necessary for the company to report a minimum pension liability at Dec.31,2012? If so what is the amount.

Accepted Answer

The answer of The following information is related to the...

Differences between income before taxes and taxable income are either or .

A company that uses FIFO will find that its ___________________________________ account tends to be somewhat out of date.

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

Which of the following is not one of the GAAP classifications for derivatives?

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.

When cash collectibility is uncertain the ___________________________________ method matches the costs of generating revenues dollar for dollar with cash receipts until the firm recovers all such costs.

To calculate a company's average tax rate an analyst would

Falcon Networks Falcon Networks is a leading semiconductor company with operations in 17 different countries.Information about the company's taxes appears below: Using the information provided by Falcon Networks determine the foreign effective tax rate for 2012.

A company that uses LIFO will experience a ______________________________ during a period it sells more units than it purchases.

If the portions of the firm's foreign operations in higher-tax-rate countries grew more rapidly than foreign operations in lower-tax-rate countries,the company may seek out more tax effective ways of operating abroad through all of the following means except:

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 ____________________.

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

Presented below is pension information related to Power Corp.for the year 2012: The amount of pension expense to be reported for 2012 is

Under the accrual method of accounting when a firm has substantially completed its value-adding activities it should recognize ____________________.

The following information is related to the defined benefit pension plan of Xavier Company for 2012: Required: 1.Using the above information calculate pension expense for 2012? 2.Will it be necessary for the company to report a minimum pension liability at Dec.31,2012? If so what is the amount.

Overview of Financial Reporting, Financial Statement Analysis, and Valuation

Asset and Liability Valuation and Income Measurement

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

Profitability Analysis

Risk Analysis

Financing Activities

Investing Activities

Accounting Quality

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 8: Operating Activities

Differences between income before taxes and taxable income are either ____________________ or ____________________.

A company that uses FIFO will find that its ___________________________________ account tends to be somewhat out of date.

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

Which of the following is not one of the GAAP classifications for derivatives?

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.

When cash collectibility is uncertain the ___________________________________ method matches the costs of generating revenues dollar for dollar with cash receipts until the firm recovers all such costs.

To calculate a company's average tax rate an analyst would

Falcon Networks Falcon Networks is a leading semiconductor company with operations in 17 different countries.Information about the company's taxes appears below: Using the information provided by Falcon Networks determine the foreign effective tax rate for 2012.

A company that uses LIFO will experience a ______________________________ during a period it sells more units than it purchases.

If the portions of the firm's foreign operations in higher-tax-rate countries grew more rapidly than foreign operations in lower-tax-rate countries,the company may seek out more tax effective ways of operating abroad through all of the following means except:

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 ____________________.

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

Presented below is pension information related to Power Corp.for the year 2012: The amount of pension expense to be reported for 2012 is

Under the accrual method of accounting when a firm has substantially completed its value-adding activities it should recognize ____________________.

The following information is related to the defined benefit pension plan of Xavier Company for 2012: Required: 1.Using the above information calculate pension expense for 2012? 2.Will it be necessary for the company to report a minimum pension liability at Dec.31,2012? If so what is the amount.

Overview of Financial Reporting, Financial Statement Analysis, and Valuation

Asset and Liability Valuation and Income Measurement

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

Profitability Analysis

Risk Analysis

Financing Activities

Investing Activities

Accounting Quality

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

Differences between income before taxes and taxable income are either or .