1. Which of the following is a reason why lease accounting under U.S. GAAP and IFRS...
1. Which of the following is a reason why lease accounting under U.S. GAAP and IFRS were revised?
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It was too easy for firms to circumvent lease capitalization criteria.
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To enhance comparability for analyzing different companies’ financial statements.
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Operating leases were a popular means of off-balance sheet financing.
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All of these answer choices are correct.
2. A temporary difference that causes book income to be greater than or less than taxable income when it is initially recorded is a/an:
Multiple Choice
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reversing temporary difference.
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originating temporary difference.
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permanent difference.
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minor difference.
3. The net pension liability that must be shown on the balance sheet of the plan sponsor is the:
Multiple Choice
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accumulated benefit obligation.
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projected benefit obligation.
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excess of the accumulated benefit obligation over the plan assets at fair value.
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excess of the projected benefit obligation over the fair value of plan assets.
Homework Answers
1) All of these answer choices are correct.
(
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It was too easy for firms to circumvent lease capitalization criteria.
-
To enhance comparability for analyzing different companies’ financial statements.
-
Operating leases were a popular means of off-balance sheet financing.)
2) originating temporary difference.
3) excess of the projected benefit obligation over the fair value of plan assets
Reason:An employer needs to recognize the over or under funded status of its pension plan. A liability needs to be reported when the fair value of the plan assets is less than the projected benefit obligation.
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