- CFA Exams
- CFA Level I Exam
- Study Session 9. Equity Valuation (1)
- Reading 24. Equity Valuation: Applications and Processes
- Subject 3. The valuation process
CFA Practice Question
Which of the following observations signal(s) poor quality of figures provided in the income statement and the balance sheet?
II. Lessor use of capital lease classification.
III. Capitalizing product development costs.
IV. Low expected return on assets for pension.
I. Recording sales of software after installation and acceptance by customer.
II. Lessor use of capital lease classification.
III. Capitalizing product development costs.
IV. Low expected return on assets for pension.
A. I and III
B. II and III
C. III and IV
Explanation: II recognizes revenue early. III may boost current income at the expense of future income.
User Contributed Comments 1
| User | Comment |
|---|---|
| bacorson | So why isn't it A? |