17. Capitalization of certain costs subsequent to the acquisition of an asset, w

Question

17. Capitalization of certain costs subsequent to the acquisition of an asset, which are related to the asset, is typically done
A. because of the materiality of the amount involved
B. because it increases the salvage value of the asset
C. because of the uncertainty of future economic benefit
D. because the costs has future service potential for the asset

18. When accounting for income taxes, advocates of partial allocation argue that
A. permanent differences should be considered when calculating income tax expense
B. the valuation account for deferred tax assets is unnecessary
C. the amounts of deferred tax liabilities will not reverse as new future transactions will generate continuous deferred tax liabilities
D. individual temporary differences should be reported same period as the related transactions

Explanation / Answer

17. Capitalization of certain costs subsequent to the acquisition of an asset, which are related to the asset, is typically done

D. because the costs has future service potential for the asset

18. When accounting for income taxes, advocates of partial allocation argue that

C. the amounts of deferred tax liabilities will not reverse as new future transactions will generate continuous deferred tax liabilities

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