Prior Corp

question 95

Multiple Choice

Prior Corp.plans to change its method of accounting for supplies.Both the old and new methods are acceptable.Which of the following statements is correct regarding the change?

• A)The taxpayer will need to amend prior returns to reflect the new method.
• B)The taxpayer will report the full amount of change in the current tax return.
• C)The taxpayer will report the net adjustment over four years.
• D)The taxpayer will report the net adjustment and pay the tax when it files the Form 3115.

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Definitions:

Accrual-based Consolidated Net Income

The net income of a consolidated group of companies, calculated using the accrual method of accounting, which records revenues and expenses when they are incurred, regardless of cash movement.

Proportionate Book Value

The value of a company based on its balance sheet, where assets and liabilities are proportionately adjusted to reflect its actual market value.

Trademarks

Identifiable symbols, logos, or names used by companies to distinguish their products or services from those of others.

Goodwill

An intangible asset that arises when a business is acquired for more than the fair value of its net identifiable assets, representing non-physical assets like reputation.