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Free CMA Exam Braindumps (page: 162)

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Shelf registration of a security is a procedure affixing a front

  1. Register an issue pen on its securities for a specified penned of time.
  2. Control both the issue price and the secondary market price of its securities by registering these prices for a specified period of time.
  3. Register a secant for a specified period of time and then sell the securities on a piecemeal basis
  4. Freeze the market price of its new issues of securities for a specified penned of time,

Answer(s): C

Explanation:

SEC Rule 415 allows corporations to file registration statements covering a stipulated amount of securities that may be issued over the 2-year effective penned of the statement The securities are placed on the shelf and issued at an opportune moment without the necessity of tiling a new registration statement, observing a 20-day waiting period, or prepping a new prospectus The issuer is required only to provide updating amendments or to refer investors to quarter and annual statements tiled with the SEC. Shelf registration is most advantageous to large corporations that frequent offer securities to the pubic.



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The annual tax depreciation sense on an asset reduces income taxes by an amount equal to

  1. The firm's average tax rate times the depreciation amount.
  2. One minus the firm's average tax rate trine The depreciator amount.
  3. The forms marginal tax rate times the depreciation amount.
  4. One minus the firm's marginal tax rate times the depreciation amount

Answer(s): C

Explanation:

A depreciation deduction will reduce a firm's tax by the amount of the deduction flumes the 1rnarginal tax rate A dollar deducted is offset against the firm's last (marginal) dollar of income



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None of the following items are deductible in calculating taxable income except

  1. Estimated liabilities for product warranties expected to be incurred in the future
  2. Dividends on common stock declared but not payable until next year.
  3. Bonus accrued but not paid by the end of the year to a cash-basis 90% shareholder
  4. Vacation pay accrued on an employee-by-employee basis.

Answer(s): D

Explanation:

Sec.162(a) states that a deduction is allowed for the ordinary and necessary expenses incurred during the year in any trade or business. A corporation may therefore deduct a reasonable amount for compensation Accrued vacation pay is a form of compensation that results in an allowable deduction for federal income tax purposes



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An of the following are adjustments/preference items to corporate taxable income in calculating alternative minimum taxable income except

  1. Accelerated depreciation over straight line on most real property placed into service prior to 1987.
  2. Mining exploration and development costs
  3. A charitable contribution of appreciated property,
  4. Sales commission earned in the current year but paid in the following year

Answer(s): D

Explanation:

Taxable income is adjusted to maven at attentive minimum taxable income, Some of the common adjustments include gains or losses from long-term contracts, gains on installment sales of real property. mining exploration and development costs, charitable contributions of appreciated property, accelerated depreciation, the accumulated current earnings adjustment, and tax-exempt interest on private activity bonds issued after August 7, 1986 A sales commission accrued in the current year but paid in the following year is not an example of an AMT adjustment.






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