Q1. Which of the following situations will most likely require a company to record a valuation allowance on its balance sheet? A) A firm is unlikely to have future taxable income that would enable it to take advantage of deferred tax assets. B) To report depreciation, a firm uses the double-declining balance method for tax purposes and the straight-line method for financial reporting purposes. C) A firm has differences between taxable and pretax income that are never expected to reverse.
Q2. Which of the following statements best justifies analyst scrutiny of valuation allowances? A) Changes in valuation allowances can be used to manage reported net income. B) If differences in taxable and pretax incomes are never expected to reverse, a company’s equity may be understated. C) Increases in valuation allowances may be a signal that management expects earnings to improve in the future.
Q3. Which of the following statements best describes the impact of a valuation allowance on the financial statements? A valuation allowance: A) reduces reported income, increases liabilities, and reduces equity. B) increases reported income, reduces assets, and reduces equity. C) reduces reported income, reduces assets, and reduces equity.
| 
发表于 2009-1-19 11:00
| 
