DISCUSSION QUESTIONS:
Investments
Why do companies make investments in other companies? What are the differences between debt and equity investments? What would influence a company to choose equity or debt as an investment?
Investments
How do the various classifications of investments affect financial statements? What is the rationale behind the different accounting methods for the various investment classifications? Which is more important when determining the accounting method for securities, influence, or ownership? Explain why.
Derivatives
What are the differences between traditional and derivative instruments? Why do companies use derivative instruments? Are derivatives a good investment? Explain why or why not.
Taxable and Financial Income
Why are there differences between taxable and financial income? What are some examples of permanent and temporary differences? Why do these differences exist? How do they affect the financial statements?
Deferred Tax Asset and Liabilities
How are deferred tax assets and deferred tax liabilities derived? How do they relate to the difference between tax expense and taxes payable? How could an organization have tax receivable? Why is the tax expense reported on the income statement comprised of current and deferred tax?
NOL
How are the tax benefits of net operating losses (NOL) disclosed on the financial statements? Which is more beneficial to an organization, an NOL carryforward or an NOL carryback? Explain why. When would a company decide to forego a carryback?
Reference:
Kieso, D.E., Weygandt, J.J., & Warfield, T.D. (2013). Intermediate accounting (15th ed.). Hoboken, NJ: John Wiley & Sons.