Question 56
Under the liability method, an increase in a firm’s future tax rate will:
A) reduce both deferred tax assets and deferred tax liabilities.
B) reduce deferred tax assets and increase deferred tax liabilities. C) increase both deferred tax assets and deferred tax liabilities. D) increase deferred tax assets and reduce deferred tax liabilities. Question 57
Caruso Inc. issued a bond several years ago with proceeds of $500,000. This year, when the market value of the bond was $610,000 and the book value was $575,000, Caruso called the bond at the call price of $600,000. Which of the following amounts represents the correct r
ecording of the debt retirement transaction?
A) $10,000 gain on statement of change in equity.
B) $10,000 loss on income statement. C) $25,000 loss on income statement. D) $100,000 loss on statement of change in equity. Question 58 Luxury Inc.’s financial statements for the year ended December 31, 20X2 included the following information (in $ millions): Income Statement
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| Sales | 59 | Cost of Goods Sold | (23) | Wage Expense | (15) | Interest Expense | (6) | Depreciation Expense | (8) | Income Taxes Paid | (4) | Net Income | 3 |
Balance Sheet
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| Dec 31, 20X1
| Dec 31, 20X2
| Cash | 8 | 12 | Accounts Receivable | 4 | 5 | Property, Plant & Equip. | 79
| 78
| Total Assets | 91 | 95 | Accounts Payable | 4 | 6 | Long-term Debt | 70 | 70 | Common Stock | 10 | 10 | Retained Earnings | 7
| 9
| Total Liabilities & Equity | 91 | 95 |
Cash flow from operations (CFO) for Luxury, Inc. for the year ended December 31, 20X2 was:
A) $13 million.
B) $11 million. C) $12 million. D) $3 million. Question 59
Which of the following items is least likely to be found in a company’s financial statement footnotes? Information about:
A) debt agreement terms.
B) the uncertainty regarding key assumptions. C) major shareholders. D) leases and off-balance-sheet financing. Question 60 On December 31, 20X1, York Company executes a 6-year lease with annual payments of $1,500,000 for a crane for its construction business. Title to the crane passes to York at the end of the lease. The interest rate implicit in the lease is 5%. York Company’s incremental borrowing rate is 8%. The fair market value of the crane at the time the lease was signed was $8,500,000. If the lease is accounted for as a capital lease, the crane will be depreciated on a straight-line basis over its economic life of 9 years. Treating the lease as an operating lease, York’s income statement for the year ended December 31, 20X2 is as follows ($ thousands): Sales | $34,000 | Cost of Goods Sold | 17,200
| Gross Profit | 16,800 | Depreciation | (3,400) | Lease Expense | (1,500) | Sales and Administration | (4,200) | Operating Profit | 7,700 |
After considering whether the crane lease should be reclassified as a capital lease, York’s operating profit for 20X2 should:
A) decrease to $6,854,000.
B) remain unchanged because reclassifying the lease will only affect taxes and net profit. C) increase to $8,354,000. D) remain unchanged because the lease is appropriately classified as an operating lease.
[此贴子已经被作者于2008-11-8 17:59:51编辑过] | 
发表于 2008-5-26 12:32
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