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Mice21 [21]
3 years ago
11

Klapper Company claimed a tax deduction which was uncertain when it was deducted in 2018 but is relatively certain of receiving

the deduction over a five-year period. Which of the following is not correct in accounting for the uncertain tax item?
a. A contingency reserve will be set up at the same amount as the deferred tax asset if the firm is certain it may claim 100% of the deduction over time.
b. Income tax expense in the first year is the current portion of income tax expense minus the increase in the deferred tax asset.
c. The contingency reserve is reduced each year with the offset to the deferred tax account.
d. As the company will ultimately get 100% of the deduction, no contingency reserve is required.
Business
1 answer:
sammy [17]3 years ago
5 0

Answer: d. As the company will ultimately get 100% of the deduction, no contingency reserve is required.

Explanation:

Just because the company will eventually get 100% of the deduction does not mean that no contingency reserve is required.

A contingency reserve needs to be created that is the same amount as the deferred tax asset which arises from the claimed deduction and deducted from every year to offset the deduction for that particular year until the 5 years have elapsed.

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g The process of gathering information and forecasting relevant trends, competitive actions, and circumstances that will affect
wariber [46]

Answer:

C. environmental scanning

Explanation:

Environmental scanning is a management strategy that focuses on systematically acquiring informations about occasions, trends, events or patterns through surveys and analysis of these information in an organisation's external and internal environment.

Basically, the informations acquired through environmental scanning are used by the executive (top) management in strategically planning the organisation's future and exploitation of available opportunities for the success of the organization.

Furthermore, the internal environmental scanning offers an organization strength and weakness while the external environmental scanning provides information about opportunities and threats.

On the other hand, the external environmental scanning gives an overview of the opportunities in the market as well as potential threats to an organization.

In conclusion, environmental scanning is a process which typically deals with gathering external and internal informations, forecasting relevant trends to an organization, competitive actions, and circumstances that will affect business operations in geographic areas of potential interest to an organization.

5 0
2 years ago
If an industry consisting of two firms produces a total of 12 units, the market price is $10. If 13 units are produced, the pric
Olenka [21]

Answer: $3; $6

<span>The two firms formed a cartel which means they agree to produce same with the purpose of maintaining prices at a high level and restricting competition.</span> In the case of two firms who agree on producing 6 units but one cheat, this will be the effect:

<span><span>At 6 units each, and a market price of $10, each firm will have a gross sale of $60. If one cheats and produced 7, the market price will fall to $9, resulting to $63 (7*9)  and a gain of $3. The noncheating firm will acquire a sale of $54 (6*9) only or a loss of $6. The answer is  </span><span>$3; $6.</span></span>
8 0
3 years ago
At the end of its first month of operations, JMP Consulting reported net income of $25,000. They also had account balances of: C
garri49 [273]

Answer:

The amount of total stockholders’ equity reported on the balance sheet at month-end is $30,000.

Explanation:

Stockholders’ equity comprises retained earnings, common stock and any other statutory reserves. The retained earnings is the accumulation of net income or loss over years minus dividend paid while common stock is the value of the shares owned by the owners or the public and the owners are entitled to dividends.

The amount of total stockholders’ equity reported on the balance sheet at month-end is simply $5,000 + $25,000 = $30,000.

6 0
3 years ago
Consider the following statements about the step-down method of service department cost allocation: I. Under the step-down metho
WINSTONCH [101]

Answer:

The correct statements under the step-down method are:

a. I, II, and III.

Explanation:

The step-down method of allocating the costs of service departments is one of the three methods in use.  The others include the direct method and the reciprocal method.  With the direct method, service departments' costs are directly allocated to the production departments without any allocation to a service department.  The reciprocal method is much more involved, using formulas and calculations.  The step-down method allocates the service departments' costs to all the other service and production departments, except itself.  This step is eventually followed until all the service departments' costs have been allocated to the production departments.

8 0
3 years ago
What is always true about trial balance reports? (You may select more than one answer. Single click the box with the question ma
Keith_Richards [23]

Answer:

The correct answers are letters "A", "C" and "D": All accounts with balances are included in the report; The report is prepared for a range of dates; The total of the debit column must equal the total of the credit column.

Explanation:

A Trial Balance is a worksheet detailing the debit and credit balances of all the accounts for the company. According to accounting theory, the sum of all debits will be the sum of all credits for a given period. Relevant accounting activity of previous periods can be included. Since the trial balance is a list of all accounts, it acts as a test of accuracy.

8 0
3 years ago
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