If the Software Refinement Had Been Capitalized and Amortized Over

question 21

Multiple Choice

If the software refinement had been capitalized and amortized over a three year period beginning in the year the cost was incurred, but was expensed for tax purposes, the deferred tax position at the end of fiscal 2005 would have been:

• A) A deferred tax credit of $2.8M
• B) A deferred tax credit of $3.5M
• C) A deferred tax credit of $5.2M
• D) A deferred tax debit of $4M

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Definitions:

Dividend

A payment made by a corporation to its shareholders, usually as a distribution of profits, which can be issued in various forms such as cash payments or further shares.

Geometric Average Rate

The average rate of return that accounts for compounding over a specified time period.

Stock

A type of investment that represents ownership in a corporation, giving the holder a claim on part of the corporation's assets and profits.

Standard Deviation

A statistical measure that quantifies the variation or dispersion of a set of data points.