FAR 5

Question 1

Does investor have to have influence in the company as well as 20-50 ownership in a company in order to use Equity method?

Answer 1

Yes

Question 2

Contributing inventory/RE for partnership is recorded at carrying amount or fair Market value?

Answer 2

Fair Market value

Question 3

What is asset and liability approach?

Answer 3

Requires tax payable or deferred tax liability be recorded for the current period.

Question 4

How does depreciation of a Tangible asset cause a deferred tax liability?

Answer 4

Deferred tax liability is cause from depreciation because MACRS is used as a depreciation method for tax purposes which may be more than depreciation method for financial statement purposes.

Question 5

Example of deferred tax asset?

Answer 5

Net Operating Loss.

Question 6

Upon settling payable or receiving proceeds from receivable involving foreign currency exchange, is gain/loss recognized at initial post of transaction or balance at year end?

Answer 6

Year end

Question 7

What is bonus method?

Answer 7

If bonus is included in withdrawal of partner, bonus is allocated from the remaining partners.

Question 8

Does equipment valued at fair value amortized?

Answer 8

Excess carrying amount of equipment over fair value is amortized over the life of the asset.

Question 9

How is net income affected by amortization of excess carrying amount under equity method?

Answer 9

Excess carrying amount of equipment over fair value is amortized, which each amortized amount reduces investors share of net income.