company uses the LIFO cost flow method for its income tax return, it must also use LIF ancial statements. company uses an accelerated depreciation method (i.e., double-declining balance, MA ome tax return, it can use the straight-line method for its financial statements. of the above statements (is) are true? y ly her statement is true. I and II

company uses the LIFO cost flow method for its income tax return, it must also use LIF ancial statements. company uses an accelerated depreciation method (i.e., double-declining balance, MA ome tax return, it can use the straight-line method for its financial statements. of the above statements (is) are true? y ly her statement is true. I and II

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter6: Accounting Quality

Section: Chapter Questions

Problem 2IC

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What is true? a.EBIT and Operating Income are often used interchangeably b.If a firm records depreciation expense on the income statement, then EBIT will be less than EBITDA (e.g.Earnings Before Interest, Taxes, Depreciation and Amortization) c.EBIT is an acronym for Earnings Before Interest and d.Taxes All of the above
A company wishes to report the highest earnings possibleaccording to GAAP. Therefore, when calculating depreciation for financial reporting purposes,a. It will follow the MACRS depreciation rates prescribedby the IRS.b. It will estimate the shortest lives possible for itsassets.c. It will estimate the longest lives possible for its assets.d. It will estimate lower residual values for its assets.
Is there a reason to pick one over the other? Which formula would apply to a certain company or scenario? 1. FCFF=CFO +Int (1-Tax rate) - FCInv 2. FCFF=NI + NCC + Int (1-Tax rate)-FCInv-WCInv 3. FCFF=EBIT (1-Tax rate) + Dep - FCInv -WCInv 4. FCFF=EBITDA (1-Tax Rate) + Dep (tax rate) - FCInv - WCInv
Where can I find the net profit after tax of a company? I am looking at a balance sheet and I do not see it. I am trying to calculate the ROA of Carnival (CCL)
On the multiple-step income statement, which of the following would be the least likely to be found in the section often described as "Other Revenues and Expenses" (or "Other Income and Losses)? a. Dividend revenue b. Interest expense c. Gains or losses on the sale of a long-term asset d. Interest revenue e. Income tax expense
(d) Use the above Adjusted Trial Balance to derive the full 2020 Statement of Income (Profit& Loss) of the company. Calculate and show Gross Profit, Operating Profit, Profit beforeInterest and Tax, Profit before Tax. Calculate Net Profit = Profit before Tax – Corporate TaxExpense assuming a 30% corporate tax rate.(Consider the various expenses incl. depreciation expense as part of operating expenses,although not as part of Cost of Goods Sold. Rent Revenue is part of non-operatingactivities)
Which of the statements is Not True about the Financial Expenses Coverage Ratio? a) Its general standard is 7 or 8 times b) It shows whether EBIT is sufficient to cover the financial expenses c) It shows whether the taxable Income of the firm is sufficient to cover the financial expenses d) When EBIT / Financial Expenses = 1, the firm has 0 profits after the financial expenses are paid
a. What is your company’s primary revenue, secondary revenue, and gains? b. What is your company’s primary expenses, secondary expenses, financial activity generated expenses, and losses? c. What is the revenue trend? Does the 10-K or 10-Q discuss primary revenues, as well as other revenue types? d. What do the accounting policies say in the annual report (footnotes) regarding the cost of revenue? What are the drivers to the cost of revenue and the trends?
Required Answer each of the following questions by providing supporting computations. 1. Assume that the company’s income tax rate is 30% for all items. Identify the tax effects and after-tax amounts of the three items labeled pretax. 2. Compute the amount of income from continuing operations before income taxes. What is the amount of the income tax expense? What is the amount of income from continuing operations? 3. What is the total amount of after-tax income (loss) associated with the discontinued segment? 4. What is the amount of net income for the year?
1. Which of the following disclosures is required for a change from Average costing to FIFO? a. The cumulative effect on prior years, net of tax, in the current income statement b. The justification for the change c. Pro forma data on income and earnings per share d. All of these are required. 2. An example of a change in accounting principle that should be handled currently is a change from the a. completed-contract method to the percentage-of-completion method for long-term contracts. b. Average method to the FIFO method for inventory valuation. c. sum-of-the-years'-digits method to the straight-line method. d."full cost" method to another method in the extractive industry
Which of the following is a measurement of earnings that represents the profit before interest, taxes, depreciation and amortization are subtracted? A. net income B. retained earnings C. EBITDA D. EPS
If a company capitalizes costs that should be expensed, how is its income statement for the current period impacted? A. Assets understated B. Net Income understated C. Expenses understated D. Revenues understated