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Question The following information has been gathered regarding Williams Investing, which uses the straight-line method for depreciation. Depreciable life of 8 years on its assets. Net book value of assets is $ 40 million. Accumulated depreciation is $ 28 million. Salvage value is $12 million. It recently revised the estimates for the remaining useful life of its assets from 4 years to 6 years. Net income before the change is $13 million. The effective tax rate for the firm is 40 percent. Depreciation expense for Williams Investing will decrease by:

A.
A. $ 2.3 million.

B.
B. $ 3.6 million.

C.
C. $ 1.4 million.

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Using the lower of cost or market principle under U. S. GAAP, if the market value of inventory falls below its historical cost, the minimum value at which the inventory can be reported in the financial statements is the:（）

A. net realizable value.
B. market price minus selling costs minus normal profit margin.
C. net realizable value minus selling costs.

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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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A. A. $ 2.3 million. B. B. $ 3.6 million. C. C. $ 1.4 million.

Using the lower of cost or market principle under U. S. GAAP, if the market value of inventory falls below its historical cost, the minimum value at which the inventory can be reported in the financial statements is the:（）

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

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

A.
A. $ 2.3 million.

B.
B. $ 3.6 million.

C.
C. $ 1.4 million.