Suppose You Borrowed $12,000 at a Rate of 9% and Must

question 85

Multiple Choice

Suppose you borrowed $12,000 at a rate of 9% and must repay it in 4 equal installments at the end of each of the next 4 years.How much would you still owe at the end of the first year,after you have made the first payment?

• A)$7,636.79
• B)$8,038.73
• C)$8,461.82
• D)$9,375.98

---

Definitions:

Interperiod Tax Allocation

The process of distributing income tax expenses or benefits over different accounting periods to match taxes with the revenues they relate to.

Intraperiod Tax Allocation

The apportionment of income taxes within a financial reporting period to different components of net income and other comprehensive income.

Valuation Allowance

A contra-account used to reduce the carrying value of deferred tax assets if it is more likely than not that some portion will not be realized.

U.S. GAAP

Generally Accepted Accounting Principles as practiced in the United States, a framework of accounting standards, principles, and procedures.