Intermediate Accounting Iii

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Midterm Exam Review
1.The revenue recognition principle provides that revenue is recognized when? Pages 907-8
Dot Point, Inc. is a retailer of washers and dryers and offers a three-year service contract on each appliance sold. Although Dot Point sells the appliances on an installment basis, all service contracts are cash sales at the time of purchase by the buyer. Collections received for service contracts should be recorded when?
An alternative available when the seller is exposed to continued risks of ownership through return of the product is what? Page 910
2. In selecting an accounting method for a newly-contracted long-term construction project, the principal factor to be considered should be what? Page 933
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No other differences existed between book income and taxable income except for the amount of depreciation. [page 984])
Assuming a 30% tax rate, what amount was deducted for depreciation on the corporation's tax return for the current year?
5. Machinery was acquired at the beginning of the year. Depreciation recorded during the life of the machinery could result in (Page 1002)

Future Future Taxable Amounts Deductible Amounts
a. Yes Yes
b. Yes No
c. No Yes
d. No No

Tax rates other than the current tax rate may be used to calculate the deferred income tax amount on the balance sheet if
A temporary difference arises when a revenue item is reported for tax purposes in a period After it is reported Before it is reported in financial income in financial income
a. Yes Yes
b. Yes No
c. No Yes
d. No No

6. Deferred taxes should be presented on the balance sheet (Page 984)
Deferred tax amounts that are related to specific assets or liabilities should be classified as current or noncurrent based on
A deferred tax liability is classified on the balance sheet as
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