Question 61
A company takes a $10 million asset impairment writedown in 20X3. The most likely effects of this will be to:
A) decrease net income and taxes payable in 20X3.
B) increase return on equity and operating cash flow in 20X4. C) increase operating cash flow and deferred tax assets in 20X3. D) increase reported net income in 20X4. Question 62 Selected information from Willingham Corp.’s financial statements for the year ended December 31 included the following (in $ millions): Accounts Payable | 12 | Long-term Debt | 32 | Common Stock | 10 | Retained Earnings | 16 | Total Liabilities and Equity | 70 |
During the year, Willingham paid $14 million cash to purchase a franchise and fully expensed the franchise cost. If the company had elected to amortize the franchise cost over 7 years instead of expensing it, Willingham’s total asset-to-equity ratio would be closest to:
A) 1.84.
B) 2.16. C) 3.15. D) 2.69. Question 63 Hally Inc. incurred costs (payable to a third party) to acquire a 20-year patent for a specially designed type of running shoe. Hally also incurs advertising and promotion costs to market this product. Which of the following treatments is correct for Hally’s patent costs and advertising and promotion costs, respectively? Patent costs Advertising and promotion costs
A) Capitalize and amortize Capitalize and amortize
B) Expense as incurred Expense as incurred
C) Expense as incurred Capitalize and amortize
D) Capitalize and amortize Expense as incurred Question 64
Majestic Inc. has issued two separate bonds. Bond X is a $500,000, 8% coupon bond maturing in six years. Bond Y is a $750,000 face value zero-coupon bond maturing in six years. Assume the current market rate of interest on both of these bonds is 8%. Based on this information, which of the following statements contrasting the cash flow effects of issuing Bonds X and Y is most accurate? For the period of issuance:
Bond X Bond Y A) CFF is higher than for Bond Y CFO is lower than for Bond X B) CFF is higher than for Bond Y CFO is higher than for Bond X C) CFF is lower than for Bond Y CFO is higher than for Bond X D) CFF is lower than for Bond Y CFO is lower than for Bond X Question 65
Home Products, Inc. purchased security equipment for its headquarters that cost $2,000,000 on January 1, 20X0. Home Products is depreciating the equipment over 10 years on a straight-line basis for financial reporting and using the double declining balance method for tax purposes. The salvage value of the equipment is $200,000. Home Products’ tax rate is 40%. Depreciation expense related to this equipment will reduce Home Products' income tax expense reported on December 31, 20X0 by:
A) $72,000.
B) $400,000. C) $88,000. D) $80,000.
[此贴子已经被作者于2008-11-8 17:59:19编辑过] | 
发表于 2008-5-26 12:34
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