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Question:
Deferred tax liability refers to balance sheet amounts chat are created when tax expense is greater than taxes payable.
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Consider an asset whose carrying amount was revalued downwards in 2014. In 2015, if the value of the asset is revised upwards, the impact on reported leverage and return on equity will most likely be: Reported Leverage and Return on Equity
Improves Increases
A company that receives a cash payment for a service it will provide in the next accounting period is least likely to recognize:
accrued revenue.
Data for a manufacturing industry indicate that inventories of work in progress are increasing faster than sales. This is most likely to indicate that:
firms expect demand to increase.
An increase in which of the following will not always result in an improvement in a company’s return on equity?
Financial leverage ratio
A dealer of large earth movers that leases the machinery to its customers most likely to treat the leases as:
sales-type leases, and account for inventory using specific identification.
Which of the following items affects owners’ equity but is not included as a component of net income?
Foreign currency translation gains and losses.
ABC Corp. purchases a milling machine. The company considers the machine’s rotating cutter to be a significant component. Which of the following is least likely an additional estimate that the company will be required to make if it depreciates the milling machine using the component method instead of depreciating it as a whole?
Useful life of milling machine
A firm that reports its lease of a conveyer system as an operating lease must disclose:
minimum lease payments for each of the next five years and the sum of lease payments more than five years in the future.
During a period when net income is unexpectedly weak, managers who attempt to smooth earnings are most likely to:
capitalize an expense.
A manufacturing firm shuts down production at one of its plants and offers the facility for rent. Based on the market for similar properties, the firm determines that the fair value of the plant is €500,000 more than its original cost. If this firm uses the cost model for plant and equipment and the fair value model for investment property, should it recognize a gain on its income statement?
No, because the increase in value does not reverse a previously recognized loss.
Consider the following statements:Statement 1: When the tax base of a liability exceeds its carrying value, it results in a deferred tax asset.Statement 2: Permanent differences result in a difference between the company’s statutory and effective tax rate.Which of the following is most likely?
Only Statement 2 is correct.
Which of the following most likely contributes toward faithful representation of financial statements?
Neutrality
Which of the following statements regarding the financial statement reporting of leases is most accurate ?
Under an operating lease, the lessee treats the entire lease payment as a cash outflow from operations.
Which of the following is least likely regarding the classification of various items on the cash flow statement under IFRS and U.S. GAAP?
Interest received , CFO or CFF , CFO
Which of the following sources of changes in the net pension asset/liability is most likely to be recognized in other comprehensive income?
Actuarial losses.
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