Answer me Why is economic substance doctrine crucial in taxaccounting?a) It only applies to non-profit organizationsb) It prevents artificial transactions designed purely fortax avoidancec) It deals with routine transactionsd) It focuses on legal form only

Explanation of Economic Substance Doctrine: The economic substance doctrine is a fundamental tax…

Answered: Why is economic substance doctrine…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter6: Cash And Receivables

Section: Chapter Questions

Problem 10MC

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Which of the following is not a criterion that must be met for an item to be classified as a liability? A certain cash payment will occur in the future. A sacrifice will require the entity’s assets or services. There is a probable future sacrifice. There is a present obligation that results from a past transaction.
How does the public good of accounting information lead to underproduction in a free market?
1) Which of the following is not true? A) A not-for-profit entity operates for purposes other than to provide goods or services at a profit. B) A not-for-profit entity may be governmental or non-governmental. C) A not-for-profit entity may possess ownership interests like a corporation. D) A not-for-profit entity receives resources from resource providers who do not expect commensurate or proportionate pecuniary return.
Under PFRS 15, in which of the following instances will the revenue from contracts with customers be recognized at a point in time instead of over time? Group of answer choices When the entity’s performance creates or enhances an asset that the customer controls as the asset is created. When the customer simultaneously receives and consumes all of the benefits provided by the entity as the entity performs. When the entity has transferred physical possession and legal title to the asset to the customer When the entity’s performance does not create an asset with an alternative use to the entity and the entity has an enforceable right to payment for performance completed to date.
Under what circumstances can a CPA be paid on a commission basis? Why do you think the regulation impose these restrictions?
True or False According to PFRS 15, if an entity expects that a portion of giftcertificates sold will not be redeemed, the entity recognizes theexpected breakage amount as revenue in proportion to the pattern of rights exercised by customer
With reference to IAS 37, identify the correct statements from the following: I. A contingent asset should be disclosed by note if an inflow of economic benefits is probable. II. Contingent assets must not be recognised in financial statements unless an inflow of economic benefits is virtually certain to arise. III. No disclosure of a contingent liability is required if the possibility of a transfer of economic benefits arising is remote. a- I, II and III b- I and II only c- II and III only d- I and III only
1. Which statement is incorrect regarding materiality judgments? A. An entity is only required to apply recognition and measurement equirements in PFRSS when the effect of applying them material. B. An entity need not provide a disclosure specified by a PFRS if the information resulting from that disclosure is not material. C. Public availability of information relieves an entity of the obligation to provide material information in its financial statements. D. It is inappropriate for the entity to make, or leave uncorrected, immaterial departures from PFRSs to achieve a particular presentation of its financial position, financial performance or cash flows. 2. Which of the following is an appropriate aggregation? A. Cash and cash equivalents (Cash in bank and sinking fund) B. Trade and other receivables (Accounts receivable and investment in bonds) C. Trade and other payables (Accounts payable and accruals) D. Provisions (Income tax payable and warranty liability) 3. Which of the…
The Internal Revenue Service may impose intermediate sanctions on a tax- exempt organization that gives an officer: A) Excessive compensation. B) More than the fair rental value for property owned by the officer. C) A bargain on the sale of assets. D) All of the above are transactions that may result in intermediate sanctions.
Which of the following is not an advantage of establishing a special purpose entity (SPE)? O a. avoiding consolidation O b. low cost of financing O c. use of governing agreements to restrict the SPE's activities O d. can currently be used as a way to provide off balance sheet financing
When accounting for asset exchanges, O when an exchange lacks commercial substance, either a gain or loss may be recognized. if the fair values of either the asset given up or the asset received cannot be ascertained, then the Board of Directors may assign an arbitrary value. O if a transaction lacks commercial substance, it is not recorded. an asset cannot be recognized at more than its fair value.

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Why is economic substance doctrine crucial in tax accounting? a) It only applies to non-profit organizations b) It prevents artificial transactions designed purely for tax avoidance c) It deals with routine transactions d) It focuses on legal form only