FAR 6

Question 1

What PV rate used in Finance lease?

Answer 1

if implicit rate is given use that. if not given use incremental borrowing rate.

Question 2

How Weighted avg and EOM and Historical rates are used to convert under translation method?

Answer 2

Weighted avg = Income statement
EOM = Balance sheet
Historical = Equity

Question 3

Buy - Call option

Answer 3

The buyer of a call option will benefit when the underlying stock price increases.

Question 4

Sell - Call option

Answer 4

The seller of the call option wants the underlying stock to go down. If this occurs, the buyer of the call option will not exercise the option and the seller will profit from the premium received.

Question 5

Buy - Put

Answer 5

The buyer of a put option has the right to sell stock at a specific price. The buyer will therefore benefit when the stock price goes down because the exercise price is locked in.

Question 6

How deferred tax is calculated

Answer 6

use enacted rate, in other words use future tax rate given

Question 7

what rate is used for stockholders equity ?

Answer 7

Historical rate

Question 8

How to calculate current tax and deferred tax liab?

Answer 8

> Taxable income (after permanent and temporary differences are added/deducted) times current(use enacted is no current is given) tax rate.
deferred tax liab = temporary difference x ennacted tax rate