Gillock, Inc. uses MACRS for its income tax return and the straight-line method for its financial statements. On January 1, Year 1, the company purchased a long-term asset that cost $130,000 and has a $10,000 salvage value and an expected 8-year useful life. MACRS specifies a 5-year life for that asset and a depreciation rate of 20% for the first year of its life. Which of the following would the company show on its financial records?
A. Depreciation expense of $26,000 on the income statement and $15,000 on the tax return
B. The same amount of depreciation expense for financial reporting as for income tax preparation
C. A deferred tax liability will be reported on the balance sheet
D. Less depreciation expense on the tax return than on the income statement
Answer: C
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Most long-term liabilities are reported on the balance sheet at their
A) ?net realizable value. B) ?replacement value. C) ?historical cost. D) ?present value.
Which one of the following is a factor that creates a need for an independent auditor's assessment of the financial statement presentation?
a. Complexity of transactions affecting the financial statements. b. Lack of criteria on which to base information. c. Remoteness of the user from the organization. d. Both A and C. e. Both A and B.
U.S. GAAP requires firms to report the assets and liabilities of defined benefit plans _______________________________________________________
Fill in the blank(s) with correct word
The following information is available for Richardson Company for its first year of operations: Sales in units 5,000 Production in units 8,000 Manufacturing costs: Direct labor $3 per unit Direct material $5 per unit Variable overhead $1 per unit Fixed overhead $100,000 Net income (absorption method) $30,000 Sales price per unit $40 Refer to Richardson Company. If Richardson Company were using
variable costing, what would it show as the value of ending inventory? a. $120,000 b. $64,500 c. $27,000 d. $24,000