Reference no: EM132794778
Problem 1: Using different depreciation methods for book purposes versus tax purposes for the same asset is
a. not allowed since the amount can only be calculated one way or the other, not both.
b. the direct result of the differing goals of financial and tax accounting.
c. contrary to GAAP.
d. against the Internal Revenue Code, and as such, against the law.
Problem 2: Tarkington Beers, Inc. purchased the most popular and well-known pub in a college town. Its purchase price was $1,200,000. The appraisers determined that the land should be valued at $400,000, the building at $500,000, and the equipment at $200,000. Which of the following statements is correct?
a. Tarkington Beers, Inc. paid too much for the business and needs to record a loss.
b. Tarkington Beers, Inc. should record only the appraised value of the assets.
c. Tarkington Beers, Inc. needs to adjust the value of the assets in proportion to their appraised value so that the total of the assets equals the purchase price.
d. Tarkington Beers, Inc. needs to record goodwill of $100,000.
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Which book purposes versus tax purposes for same asset is
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