121. Gains and losses in financial statements and tax returns Explain why the amount of gain or loss resulting from the sale of a depreciable asset usually differs between the seller's financial...

121. Gains and losses in financial statements and tax returns

Explain why the amount of gain or loss resulting from the sale of a depreciable asset usually differs between the seller's financial statements and income tax return. In which of these accounting reports is the gain usually larger (or the loss smaller)? Explain your reasoning.

122. Goodwill-financial reporting considerations

Cabot Corporation's balance sheet at December 31, 2009, includes an asset entitled goodwill in the amount of $900,000, net of accumulated amortization.
(a) Briefly explain what is meant by the term goodwill.
(b) Under what circumstances is goodwill recorded in the accounting records? Include in your Answer a specific situation in which Cabot would have recorded the goodwill mentioned above.

123. Research and development-financial reporting

Alert Industries has spent $5 billion over the last three years in developing a new drug labeled BJ13. FDA approval is expected by the end of the month, at which time the drug will be available for sale. None of Alert's competitors has a product similar to BJ13, and the medical community is anxiously awaiting availability of this drug. Although BJ13 promises to be a "wonder drug" with huge financial success, Alert's income statements for the last few years have shown substantial losses and Alert's balance sheet does not include product BJ13 among the assets of the business.
Explain why one of Alert's seemingly most valuable assets apparently has been omitted from the balance sheet, and why Alert's income statements for the past few years reported substantial losses.