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Key Soal Chp. 2

The document contains 7 matching questions and 6 multiple choice questions related to financial reporting and analysis topics such as deferred tax liability, inventory costing methods, impairment testing, lease accounting, and bond valuation. Key topics covered include converting between LIFO and FIFO inventory methods, impairment testing under IFRS, operating and finance lease accounting treatments, and calculating bond premiums and discounts.

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Yousania Simbiak
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35 views

Key Soal Chp. 2

The document contains 7 matching questions and 6 multiple choice questions related to financial reporting and analysis topics such as deferred tax liability, inventory costing methods, impairment testing, lease accounting, and bond valuation. Key topics covered include converting between LIFO and FIFO inventory methods, impairment testing under IFRS, operating and finance lease accounting treatments, and calculating bond premiums and discounts.

Uploaded by

Yousania Simbiak
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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CHAPTER 2.

FINANCIAL REPORTING AND ANALYSIS

https://quizlet.com/415391463/test

7 Matching questions
1. Deferred tax liability
INCORRECT
No answer given
THE ANSWER
B. Expense estimate>tax payable, now expect to pay the difference in the future

2. defined contribution plan vs defined benefit plan

INCORRECT

No answer given

THE ANSWER

E. They will support you making payments to the plan but once in it is not their
responsibility.
Defined benefit plan - they pay you a certain amount every period after retiring

3. Convert LIFO to FIFO


Page 167

INCORRECT

No answer given

THE ANSWER

C. Add lifo reserve to convert to FIFO inventory


Subtract lifo reserve*tax from cash
Add (1-tax)*lifo reserve to retained earnings
FIFO COGS = LIFO cogs * -(change in lifo reserve)
FIFO net income = income+change in lifo *(1-tax)

4. Operating Lease - lessee reporting requirements


Financial Lease - lessee reporting requirement

INCORRECT

No answer given
THE ANSWER

F. no entries in balance sheet, rent expense is recorded each month


Lower of PV of Future lease payments or fair value is recognized as an asset and laibility,
depreciation and interest expense are both also noted in income

5. How is impairment tested in IFRS

INCORRECT

No answer given

THE ANSWER

D. Annually, Impaired when Carrying value>recoverable amount


RA = greater of fair value less selling costs and value in use
value in use is the present value of future cash flows

6. What is capitalizing an expense

INCORRECT

No answer given

THE ANSWER

G. when something that costs money is treated like an asset instead of an expense. It
increases the current periods net income, increases assets, and increases equity.
Eventually this declines as depreciation comes into effect

7. IFRS recognition of investment property

INCORRECT

No answer given

THE ANSWER

A. fair value or cost model

A. fair value or cost model


B. Expense estimate>tax payable, now expect to pay the difference in the future
C. Add lifo reserve to convert to FIFO inventory
Subtract lifo reserve*tax from cash
Add (1-tax)*lifo reserve to retained earnings
FIFO COGS = LIFO cogs * -(change in lifo reserve)
FIFO net income = income+change in lifo *(1-tax)
D. Annually, Impaired when Carrying value>recoverable amount
RA = greater of fair value less selling costs and value in use
value in use is the present value of future cash flows
E. They will support you making payments to the plan but once in it is not their
responsibility.
Defined benefit plan - they pay you a certain amount every period after retiring
F. no entries in balance sheet, rent expense is recorded each month
Lower of PV of Future lease payments or fair value is recognized as an asset and
laibility, depreciation and interest expense are both also noted in income
G. when something that costs money is treated like an asset instead of an expense. It
increases the current periods net income, increases assets, and increases equity.
Eventually this declines as depreciation comes into effect

7 Multiple choice questions

1. To cogs, decreasing gross profit


1. No answer given

2. Replacement rate for PP&E


3. When inventory is written down where is the decreases added

4. Effective tax rate equation

5. Conversion of DTA and DTL to new tax rate


2. Market = NRV when NRV<Replacement
NRV range=sell price - sell cost = 47 to 47 - 10% of current sell price
43<47 so OC is lowest
1. No answer given
2. Replacement = 55
OC =43
current sell price is 50
normal profit is 10%
selling costs = 3
What is lower of cost or market

3. Explain motivation, opportunity, and rationalization in terms of credible


financials
4. results on metrics for a write down on inventory
Current
inventory turnover
asset turnover
debt to assets
equity
debt to equity
gross margin
ROA and ROE

5. Reevaluation for property conversion


Owner occupied > investment
Inventory > investment
Investment > inventory or owner occupied
3. Motivation, need to meet EPS for loans
Opportunity - weak internal controls
Rationalization - I'll get a bonus
1. No answer given

2. Replacement = 55
OC =43
current sell price is 50
normal profit is 10%
selling costs = 3
What is lower of cost or market

3. Reevaluation for property conversion


Owner occupied > investment
Inventory > investment
Investment > inventory or owner occupied

4. Operating Lease - lessee reporting requirements


Financial Lease - lessee reporting requirement
5. Explain motivation, opportunity, and rationalization in terms of credible
financials
4. accumulated depreciation/annual depreciation expense
1. No answer given

2. Effective tax rate equation

3. As a bond ages, how does I expense change

4. Replacement rate for PP&E


5. Calculate average age of assets
5. equity
1. No answer given

2. TA = 98500
Accrued L = 5k
ST debt = 12k
Bonds P = 39k
Find debt to equity

3. IFRS recognition of investment property


4. For companies growing quickly how are deferred tax liabilities treated

5. Quality of reporting, what is more important


Quality of earnings or dedication to GAAP
6. annual capex/annual depreciation
1. No answer given

2. Calculate average age of assets


3. Replacement rate for PP&E

4. Effective tax rate equation

5. When inventory is written down where is the decreases added


7. GAAP, then quality
1. No answer given

2. IFRS recognition of investment property


3. Quality of reporting, what is more important
Quality of earnings or dedication to GAAP

4. Operating Lease - lessee reporting requirements


Financial Lease - lessee reporting requirement

5. Explain motivation, opportunity, and rationalization in terms of credible


financials

6 True/False questions

1. FIFO
LIFO
FIFO
FIFO
FIFO (higher gross profit = more tax) → results on metrics for a write down on inventory
Current
inventory turnover
asset turnover
debt to assets
equity
debt to equity
gross margin
ROA and ROE

INCORRECT

No answer given

THE ANSWER

False

It should be → Rising Prices


What method represents inventory best
What method represents cogs best
What method increases inventory
What method has higher gross profit
Higher Tax

2. record depreciation and rental income

recognize sale = to present value of lease payments, and cogs = to carrying value
asset is removed from balance sheet and replaced by lease receivable of equal value. Cash
flows - interest is operating, principal is investing → Operating Lease - lessee reporting
requirements
Financial Lease - lessee reporting requirement

INCORRECT

No answer given

THE ANSWER

False

It should be → Operating Lease - lessor reporting requirements


Financial Lease - lessor reporting requirement

3. recognize gain to the max extent of original price


recognize gains or losses
previous fair value = new fair value → Reevaluation for property conversion
Owner occupied > investment
Inventory > investment
Investment > inventory or owner occupied

INCORRECT

No answer given

THE ANSWER

True

4. 97,556
98,287
99,099 → Calculate a premium bond on calculator
100,000 face value sold with three 10,000 payments.
market I = 9%
Find PV and 3 beginning book values

INCORRECT

No answer given

THE ANSWER

False

It should be → Calculate a discount bond on calculator


100,000 face value sold with three 10,000 payments.
market I = 11%
Find PV and 3 beginning book values

5. 102,531
101,759
100,917 → Calculate average age of assets

INCORRECT

No answer given

THE ANSWER

False

It should be → Calculate a premium bond on calculator


100,000 face value sold with three 10,000 payments.
market I = 9%
Find PV and 3 beginning book values

6. = historical cost / annual depreciation expense → Remaining Useful Life

INCORRECT

No answer given

THE ANSWER

False

It should be → Total Useful Life


Create new test

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