AICPA CPA-Financial Exam Dumps

Choice 'b' is correct. Part of continuing operations.

Rule: When a fixed asset is sold, gain or loss is recognized as part of income from continuing operations. The amount of the gain or loss is equal to the difference between the proceeds from the sale and the carrying amount (FMV) of the fixed asset sold.

Choice 'a' is incorrect. The gain is not extraordinary and is shown gross - not net of tax.

Choice 'c' is incorrect. The gain is part of continuing operations - not discontinued operations.

Choice 'd' is incorrect. The gain is not reported as a reduction of the cost of the new warehouse.

Choice 'c' is correct. 1990 ($25,000) $125,000

1991 -- 180,000

Because these are comparative financial statements, prior period adjustments require retroactive treatment for the years presented. Because 1989 is not presented, the 1989 correction is shown as a prior period adjustment of $25,000 to retained earnings statement of 1990.

Choice 'a' is correct. Unaffiliated customers sales and intracompany sales must be disclosed separately.

Choice 'a' is correct. Market price declines should be recognized in the interim period in which decline is judged permanent and later, if they 'turn around,' are recognized as gains in subsequent periods only to the extent of previously reported losses.

Choice 'b' is incorrect. Recovery should not cause an increase in inventory value above original cost.

Choice 'c' is incorrect. The recovery should be recognized to the extent of the first quarter write down.

Choice 'd' is incorrect.

Choice 'd' is correct. $450,000 net loss for the period Sept. 1, 1987 to DeC. 31, 1988.

Rule: 'Development stage enterprises' present their FS in accordance with GAAP and make additional disclosures such as: cumulative net losses, cumulative deficit, cumulative sales and expenses.