week 4 test

week 4 test - Question 1 [Question Bank ID: 86813] Question...

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Question 1 [Question Bank ID: 86813] Question Bank ID: 86813 Question 1 Question Bank ID: 86813 Type: Multiple Choice Inclusion Level: Normal Subject Group Common Incorrect If all temporary differences entering into the determination of pretax accounting income are considered in the computation of deferred taxes and income tax expense, then SHOW ANSWERS >> << HIDE ANSWERS [Expand All] A The no-deferral approach is being applied Explanation: B The comprehensive recognition approach is being applied Explanation: C The partial recognition approach is being applied Explanation: D The net-of-tax method is being applied Explanation: Question 2 [Question Bank ID: 19287] Question Bank ID: 19287 Question 2 Question Bank ID: 19287 Type: Multiple Choice Inclusion Level: Normal Subject Group Common Incorrect Aerotech Inc., a dealer in machinery and equipment, leased equipment to Quality Products on July 1, 2008. The lease is appropriately accounted for as a sale by Aerotech and as a purchase by Quality. The lease is for a ten-year period (the useful life of the asset) expiring June 30, 2018. The first of ten equal annual payments of $250,000 was made on July 1, 2008. Aerotech had purchased the equipment for $1,337,500 on January 1, 2008, and established a list selling price of $1,687,500 on the equipment. Assume that the present value at July 1, 2008, of the rent payments over the lease term discounted at 12 percent (the appropriate interest rate) was $1,582,500. What is the amount of profit on the sale and the amount of interest income that Aerotech should record for the year ended December 31, 2008? SHOW ANSWERS >> << HIDE ANSWERS [Expand All] A $245,000 and $94,950
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Explanation: B $245,000 and $79,950 Explanation: C $350,000 and $79,950 Explanation: D $350,000 and $94,950 Explanation: Question 3 [Question Bank ID: 22784] Question Bank ID: 22784 Question 3 Question Bank ID: 22784 Type: Multiple Choice Inclusion Level: Normal Subject Group Common Incorrect In a lease that is recorded as an operating lease by the lessee, the equal monthly rental payments should be SHOW ANSWERS >> << HIDE ANSWERS [Expand All] A Allocated between interest expense and depreciation expense Explanation: B Allocated between a reduction in the liability for leased assets and interest expense Explanation: C Recorded as a reduction in the liability for leased assets Explanation: D Recorded as rental expense Explanation: Question 4 [Question Bank ID: 100981] Question Bank ID: 100981 Question 4 Question Bank ID: 100981 Type: Multiple Choice Inclusion Level: Normal Subject Group Common Incorrect During 2008, Alpha Company had pretax accounting income of $420. Alpha’s only temporary difference for 2008 was the collection of a receivable that resulted in $120 of income under the
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installment sales method of revenue recognition that Alpha uses for tax purposes. The sale was originally made in 2006 and recognized for accounting purposes at that time. Alpha’s taxable income for 2008 would be:
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This note was uploaded on 03/25/2012 for the course EAC 3212 taught by Professor Na during the Summer '11 term at FIT.

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week 4 test - Question 1 [Question Bank ID: 86813] Question...

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