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- 43 If the “fair value less cost to sell” of a noncurrent asset held for sale is lower than its carrying value, the difference is treated as a. gain b. impairment loss c. depreciation expense d. prior period adjustmentOne of the following statements is false: a. If the underlying asset will not revert to the lessor, the residual value is simply ignored by the lessor in the computation of unearned interest income and gross profit on the sale. b. The underlying asset will remain with the lessee if the lease provides for either a purchase option that is reasonably to be exercised or transfer of title to the lessee upon the lease expiration. c. When a lessor actually sells an asset that it has been leasing, the difference between the sales price and the carrying amount of the lease receivable is recognized in profit or loss. d. The gain or loss that pertains to the right retained by the seller-lessee in a sales and leaseback transaction is not recognized.Ch19-1: Is leasing a zero sum game in the sense that any gain to the lessee is a cost to the lessor? If not, how might both parties gain from a lease transaction? In your answer, explain how lessee and the lessor analyze the situation, why they might use different inputs in their analysis, and how those inputs differences could affect the outcome
- (a) In your own words, explain how do we account for service costs included within a contract to lease an asset? (b) Briefly explain how a company calculates its current liability 'income tax payable'? (c) In your own words, explain why a temporary difference relating to employee benefits obligations for long-service leave creates a deferred tax asset (d) In your own words, briefly explain a 'qualifying asset' and how we report exchange rate differences relating to the acquisition of qualifying assets? Contrast this with the treatment for assets that are not qualifying assetsFor purposes of computing the phase out of the special deduction for active participation in a rental real estate activity, modified AGI does not include any passive losses in excess of the taxpayers passive income. True or falseWhich of the following is a false statement regarding revaluation of PPE?A. Revalued amount is either fair value or depreciated replacement cost.B. If simultaneous revaluation is not possible, revaluation can be done on arolling basis provided revaluation of the class of assets is completed withina short period of time and provided the revaluations are kept up to date.C. The difference between the PPE’s carrying amount and its revalued amount isknown as revaluation surplus and should be presented in the statement ofcomprehensive income, net of applicable tax.D. When an asset's carrying amount is increased as a result of revaluation, theincrease shall always be credited to revaluation surplus regardless of theexistence of previous impairment loss recognized. Which of the following should be included as cost of inventory?A. Depreciation expense of the delivery equipment.B. Depreciation expense of the factory machinery.C. Storage cost of finished goods.D. None from the choices. In…
- Where the carrying amount of an asset or liability is different from the tax base a ‘temporary difference’ can arise. Identify the correct statement pertaining to a temporary difference. Select one: a. A temporary difference only occur if the carrying amount of an asset or liability is the same as the tax base b. A temporary difference can never be taxable. c. A temporary difference can never be deductible for tax purposes. d. A temporary difference will result in a decrease (increase) in income tax payable (recoverable) in future periods when the carrying amount of the asset or liability is recovered or settled.Which of the following would not be considered a general long term liability?Select one:a. Long term promissory notesb. Long term portion of judgementc. Unfunded compensated absencesd. Unfunded rent obligation14.The loss of available-for-sale investment credit (AFS) cannot exceed the amount by which the fair value is less than the amortized cost. Select one: True False
- Statement 1: When the residual value is guaranteed by the lessee, the lessor shall include the same in its gross investment and net investment.Statement 1: When the residual value is not guaranteed by the lessee, the lessor shall include the same in its gross investment and net investment. Group of answer choices Only statement 2 is correct Both statements are incorrect. Both statements are correct Only statement 1 is correctThe purpose of Sec. 1245 is to eliminate the advantage taxpayers would have if they were able to reduce ordinary income by depreciation deductions and also receive favorable Sec. 1231 treatment when the asset was sold. True FalseThe modified internal rate of return (MRR) test is designed to address a limitation associated withthe use of the internal rate of return (IRR). What is that limitation?a) Working capital requirementb) Income taxesc) Reinvestment rated) Depreciation expense