QUESTION 1

Taxable amounts are temporary differences that:

		decrease taxable income in future years
		require the recording of a deferred tax liability
		require the recording of a deferred tax asset.
		none of the above

2 points

QUESTION 2

The CPA Company exchanged equipment that cost $66,000 and has accumulated depreciation of $30,000 for equipment with a fair value of $48,000 and received $12,000 cash. The exchange lacked commercial substance. The gain to be recognized from the exchange is

		$4,800 gain
		$6,000 gain
		$18,000 gain
		$24,000 gain.

2 points

QUESTION 3

A deferred tax liability represents the

		increase in taxes saved in future years as a result of deductible temporary differences
		decrease in taxes saved in future years as a result of deductible temporary differences
		increase in taxes payable in future years as a result of taxable temporary differences
		none of the above

2 points

QUESTION 4

Machinery was acquired at the beginning of the year. Depreciation recorded during the life of the machinery could result in

			Future Taxable Amounts	Future Deductible Amounts
1)			Yes	Yes
2)			Yes	No
3)			No	Yes
4)			No	No
			1
			2
			3
			4

2 points

QUESTION 5

Assets acquired in a lump sum purchase should be recorded at:

		appraised value
		relative book value
		relative fair market values
		fair market value

2 points

QUESTION 6

The CMA Company purchased machinery for $320,000 on January 1, 2010. Straight-line depreciation has been recorded based on a $20,000 salvage value and a 5-year useful life. The machinery was sold on May 1, 2014 at a gain of $6,000. How much cash did CMA receive from the sale of the machinery?

		$46,000
		$54,000
		$66,000
		$86,000