The tax rules for depreciation recapture are much more ________ than a simplified approach for disposal. A) basic B) complicated C) easy D) shortened ANSWER Answer: B
Date: September 19th, 2020
The current book value of an asset serves as the basis for determining the gain or loss at disposal. Indicate whether the statement is true or false. ANSWER Answer: TRUE
Date: September 19th, 2020
Which is NOT a step in the estimation of after-tax cash flow at disposal? A) If selling price is greater than book value: Selling Price – Tax on Gain. B) If selling price is less than book value: Selling Price + Tax Credit on Loss. C) If book value is less than selling price: Selling […]
Date: September 19th, 2020
If the selling price of an asset at disposal is greater than its book value, then the after-tax cash flow is the selling price minus the tax on the gain. Indicate whether the statement is true or false. ANSWER Answer: TRUE
Date: September 19th, 2020
A firm that is unable to pay its bills as they come due is said to be insolvent. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Means by which the securities markets serve to mitigate principal-agent or information asymmetry problems include all of the following EXCEPT: a. Management realizes that its reputation with investors is valuable, and can be sustained only if accurate information is provided on a timely basis. b. Various market mechanisms exist to discipline a firm’s management, and […]
Date: September 19th, 2020
Book value is the original cost of an asset plus the accumulated depreciation. Indicate whether the statement is true or false. ANSWER Answer: FALSE Explanation: Book value is the original cost of the asset MINUS the accumulated depreciation.
Date: September 19th, 2020
Fully depreciated assets have a positive book value, and so any proceeds from sale at disposal are taxable gains. Indicate whether the statement is true or false. ANSWER Answer: FALSE Explanation: Fully depreciated assets have A BOOK VALUE OF ZERO, and so any proceeds from sale at disposal are taxable gains.
Date: September 19th, 2020
The asymmetric information explanation of capital structure suggests that firms will issue new debt only when the managers believe the firm’s stock is overvalued; as a result, issuing new debt is considered a negative signal that will result in a decline in share price. Indicate whether the statement is true or false ANSWER […]
Date: September 19th, 2020
If the selling price of an asset at disposal is less than its book value, then the after-tax cash flow is the selling price minus the tax on the gain. Indicate whether the statement is true or false. ANSWER Answer: FALSE Explanation: If the selling price of an asset at disposal is GREATER […]
Date: September 19th, 2020
