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Selected information from Kentucky Corp. ’ s financial statements for the year ended December 31 was as follows (in $ millions) : Property, Plant & Equip. 10 Accumulated Depreciation (4) Deferred Tax Liability 0.6 The balances were all associated with a single asset. The asset was permanently impaired and has a present value of future cash flows of $ 4 million. After Kentucky writes down the asset, Kentucky’ s tax accounts will be affected as follows ( the tax rate is 40 percent) :（）

A. deferred tax liability will be eliminated and deferred tax assets will increase $ 0.2 million.
B. deferred tax liability will be eliminated and tax assets will increase $1.4 million.
C. income tax expense will decrease $ 0. 8 million.

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Which of the following statements about intangible assets is least likely correct（）

A. Generally, internally produced intangible assets are not reported on the balance sheet. B. In most countries, research and development costs are capitalized.
B. Intangible assets are reflected at their purchase prices when acquired from an outside entity.

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When a deferred tax liability account reverses it means that:（）

A. cash flows have been lessened by the amount of the reversal.
B. the actual tax bill is equal to the tax expense reported in the income statement.
C. the actual tax bill is greater than the tax expense reported in the income statement.

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Lakeside Co. recently determined that one of its processing machines has become obsolete three years early and, unexpectedly, has no salvage value. Which of the following statements is most consistent with this discovery （）

A. Historically, economic depreciation was understated.
B. Lakeside Co. will owe back taxes.
C. Historically, economic depreciation was overstated.

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If a lease is capitalized, as compared to being treated as an operating lease, the effect on the current ratio and the debt/equity ratio will be: Current Ratio Debt/Equity Ratio （）

A. decrease decrease
B. decrease increase
C. increase decrease

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A. deferred tax liability will be eliminated and deferred tax assets will increase $ 0.2 million. B. deferred tax liability will be eliminated and tax assets will increase $1.4 million. C. income tax expense will decrease $ 0. 8 million.

Which of the following statements about intangible assets is least likely correct（）

When a deferred tax liability account reverses it means that:（）

Lakeside Co. recently determined that one of its processing machines has become obsolete three years early and, unexpectedly, has no salvage value. Which of the following statements is most consistent with this discovery （）

If a lease is capitalized, as compared to being treated as an operating lease, the effect on the current ratio and the debt/equity ratio will be: Current Ratio Debt/Equity Ratio （）

A. deferred tax liability will be eliminated and deferred tax assets will increase $ 0.2 million.
B. deferred tax liability will be eliminated and tax assets will increase $1.4 million.
C. income tax expense will decrease $ 0. 8 million.