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Study Session 8: Financial Reporting and Analysis: Inventories, Long-Lived Assets, Income Taxes, and Non-Current Liabilities

DB Depreciation on Calculator

When using the DEPR sheet on TI BAII  Plus and I enter DB = 120 and correct info I do not get the correct Depreciation & RBV/RDV - however if I use DB = 160 and the correct info, I get the correct results.
Result I am looking for is RBV @ end of Yr 3 = 29,184. 
I know i can get this by multiplying 57,000(1.2)3

Cost 57,000

Salvage Value @ Purchase = 15,000

Current Fair Value of item = 27,000

Life = 8 

DB 20%

Please help 

Charges included in cost of goods sold for inventory write-downs

I need some assistance with understanding the following equation. I need to find the adjusted Net Income to calculate gross profit margin. Why is “Charges, included in cost of goods sold for inventory write-downs, after tax” added to Net Income? Also, if these charges are already “after tax”, why do we reapply the tax (1-.3) for this calculation? 

Rolby’s adjusted net profit margin must be computed using net income (NI) under FIFO and excluding charges for increases in valuation allowances.

Calculate deferred tax liability

Hi everyone,

I’m going through some quizzes I found online for the Income Taxes Chapter. I taught I mastered the chapter, but I got a mediocre result on the end of chapter questions, so I turned to some additional quizzes found online. I know this kind of resource can be of doubtful reliability and accuracy, so I would need your help.

Long Lived Assets

What is the difference between Impairment and Revaluation? How is impairment loss reversed? I am very confused between these two

Deferred Tax Liability

Dear Friends,

Here is an extract from 2008 Level 1 CFA Curriculum. In the section on ”Treatment of Operating Losses”:

1. How does the author say ”Operating losses are due to an excess of tax deductions over taxable revenues”?

Test Changes for 2019 (i.e. Op. Leases)

Hello - assuming this has already been asked (didn’t see it in my quick search though), but does anyone have a summary of the changes for the 2019 test?  Specifically am looking for changes for operating leases as these are now being added to the balance sheet.  Asking as I’m using a set of 2018 KS books that obviously do not reflect the change.  Just want to make sure I’m p

Tax base and carry amount

A company recognized rent received in advance amounting to $500,000 in the current year. For tax purposes the rental income is taxed at 10% when cash is received. The carrying value and tax base of this liability are closest to:

      Tax Base    Carrying Value
A.    $500,000    $0
B.    $0    $50,000
C.    $0    $500,000

Valuation Allowance Question

Question: 

An Increase in the valuation allowance is most likely to indicate an increase in:

A. earnings.

B. shareholder’s equity.

C. net deferred tax liability.

Please explain you reasoning:

Reading 27, Inventories

How do I learn, remember, and retain the effects of increasing/decreasing prices and the effects of inflation on COGS and a firm?