Question

In: Accounting

True Or False   _____The Fair Value Adjustment account has a normal credit balance. _____Companies report trading...

True Or False  

_____The Fair Value Adjustment account has a normal credit balance.

_____Companies report trading securities at fair value, with unrealized holding gains and losses reported in net income.

_____Equity security holdings between 20 and 50 percent indicates that the investor has a controlling interest over the investee.

_____A debt security acquired as an investment cannot be classified as a trading security.

_____One requirement related to fair value disclosure is that both the cost and the fair value of all instruments be reported in the notes to the financial statements.

_____Pretax financial income is the amount used to compute income taxes payable.

_____A deferred tax liability represents the increase in taxes payable in future years as a result of taxable temporary differences existing at the end of the current year.

_____A company should add a decrease in a deferred tax liability to income taxes payable in computing income tax expense.

_____Examples of taxable temporary differences are subscriptions received in advance and advance rental receipts.

_____Permanent differences do not give rise to future taxable or deductible amount.

Solutions

Expert Solution

The classification of statements as True of False is given below:
1 FALSE = Fair value adjustment account had a debit balance normally
2 TRUE = The statement is correct
3 FALSE = When the holding percentage is more than 50% than the investor have the controlling interest over investee
4 FALSE = Investments as debt securities shall be classified as trading securities
5 TRUE = The statement is correct
6 FALSE = Pretax financial income is not the amount to compute income taxes payable as some deductions are also there.
7 TRUE = The statement is correct
8 FALSE = This is not the correct method as stated in the statement of computation of income tax expense
9 FALSE = Temporary difference arises due to difference in tax payable income tax and tax payable as per accounting standard. These given examples are not temporary differences.
10 TRUE = The statement is correct

ekkarill92 answered 1 year ago
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