Hot, Inc'S Primary Competitor Is Cold, Inc

question 21

Multiple Choice

Hot, Inc.'s primary competitor is Cold, Inc. When comparing relative deferred tax asset and liability accounts with Cold, which of the following benchmarking activities should Hot undertake?

• A) Scale the deferred tax assets and liabilities by total sales or total assets.
• B) Compare raw dollar amounts of deferred tax assets and liabilities.
• C) Ignore deferred tax assets and liabilities and focus on overall effective tax rate.
• D) Ignore all tax information other than the current tax expense.

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Definitions:

Goodwill

An intangible asset that arises when a company is purchased for more than the fair market value of its net assets, often attributed to reputation, brand, or intellectual property.

Entire Business

The complete operational structure of a company, including all assets, liabilities, operations, and activities.

Natural Resources

Resources that occur naturally in the environment and are utilized for economic gain, such as water, minerals, forests, and fossil fuels.

Land Improvements

Enhancements made to a plot of land to increase its value, which include landscaping, paving, and installing utilities.