FRA

pooja923
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Posts: 25
Joined: Fri Mar 11, 2016 11:38 am

FRA

Postby pooja923 » Fri May 13, 2016 7:58 am

The costs least likely to be included by the CFO as inventory are: Capitalized or Expensed cost? Why? and how?

edupristine
Finance Junkie
Posts: 722
Joined: Wed Apr 09, 2014 6:28 am

Re: FRA

Postby edupristine » Wed May 18, 2016 9:45 am

Hi Pooja

Expensed cost is Lower in operations(inventory). and in capitalized cost it will be higher because capitalized cost is defined as fixed asset.

pooja923
Good Student
Posts: 25
Joined: Fri Mar 11, 2016 11:38 am

Re: FRA

Postby pooja923 » Sat May 21, 2016 7:19 am

The JME Jumpers, a professional volleyball team, sells season tickets to all home games. The cost of a season ticket is $1,000 and the team plays 20 home games, which run from April through August. For the year ended June 30, 2005, JME sold 1,200 tickets, collected 80 percent of the amount owed, and played 12 home games. How much revenue should JME recognize?
    $1,200,000.
    $720,000.
    $960,000
.

Correct option is $720,000
But how is the revenue related to home games played?
Why can't the answer be : $1000* 1200 * 80% = $960,000

edupristine
Finance Junkie
Posts: 722
Joined: Wed Apr 09, 2014 6:28 am

Re: FRA

Postby edupristine » Sat May 21, 2016 9:10 am

Hi Pooja

because there are 20 team games in which only 12 games are going to play. so the calculation is:
(1,200 × $1,000 × 12/20) = $720,000

pooja923
Good Student
Posts: 25
Joined: Fri Mar 11, 2016 11:38 am

Re: FRA

Postby pooja923 » Wed May 25, 2016 3:16 am

Corcoran Corp acquired an asset on 1 January 2004, for $500,000. For financial reporting, Corcoran will depreciate the asset
using the straight-line method over a 10-year period with no salvage value. For tax purposes the asset will be depreciated
straight line for five years and Corcoran's effective tax rate is 30%. Corcoran's deferred tax liability for 2004 will:
    1. increase by $15,000.
    2. decrease by $50,000.
    3. decrease by $15,000.

edupristine
Finance Junkie
Posts: 722
Joined: Wed Apr 09, 2014 6:28 am

Re: FRA

Postby edupristine » Wed May 25, 2016 6:49 am

Hi Pooja
the correct answer is A
straight-line depreciation per financial reports = 500,000 / 10 = $50,000
tax depreciation = 500,000 / 5 = $100,000
temporary difference = 100,000 - 50,000 = $50,000
deferred tax liability will increase by $50,000 x 30% = $15,000


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