1. The traditional accounting model delays the recognition of value change of assets and liabilities until what event occurs?

The market transaction

2. Fish Farm Corporation purchases a new tract of land on which it is going to build new growing and holding tanks in order to expand its business. Which of the following costs would not be part of the cost of the land?

Cost of new holding tanks

3. Current replacement cost represents

the amount a firm would have to pay currently to acquire an asset it now holds

4. Which of the following is not one of methods used by GAAP for treating value changes?

Recognize value changes in the income statement when the value changes occur over time, but recognize them on the balance sheet when they are realized in a market transaction

5. Which of the following transactions is consistent with recognizing value changes on the balance sheet and income statement when they are realized in a market transaction?

Selling land at cost greater than its original purchase price.

6. At origination which of the following temporary differences would create a deferred tax asset?

Tax basis of an asset exceeds its financial reporting basis

7. Plaxo Corporation has a tax rate of 35% and uses the straight-line method of depreciation for its
   equipment, which has a useful life of four years. Tax legislation requires the company to
   depreciate its equipment using the following schedule: year 1- 50%, year 2 - 30%, year 3 - 15%
   and year 4 - 5%. In 2010 Plaxo purchases a piece of equipment with a four year life and an
   original cost of $100,000. What amount will Plaxo record as a deferred tax asset or liability in
   2010?

Deferred tax liabilities of $8,750

8. The income statement approach to measuring income tax expense

compares revenues and expenses recognized for books and tax purposes, eliminates permanent differences, and computes income tax expense based on book income before taxes excluding permanent differences.

9. Future tax deductions

result in deferred tax assets.

10. Future taxable income is characteristic of all of the following situations except:

where deferred tax assets result