#59 Interim Reporting Principles

Question 1

In interim reporting, all expenses should be reported in full during the period that they occur.

True or False

Answer 1

False.

If an expense will benefit more than one period, the expense should be recognized in all periods benefited.

Question 2

Can a firm allocate a gain or loss from discontinued operations to more than one reporting period?

Answer 2

No, discontinued operations are reported solely in the period that they occur.

Question 3

In interim reporting, how should inventory losses that are not temporary be reported?

Answer 3

Inventory losses that are not temporary should be recognized in full in the period they occurred.

Question 4

What should a firm do if an inventory loss is recognized in quarter 1, but the inventory’s market price recovers in a later period?

Answer 4

A gain should be recognized up to the amount of the previously recognized loss.

Question 5

How should a firm report a decline in inventory value that is expected to recover by the end of the year?

Answer 5

Temporary declines in inventory value are not recognized.

Question 6

What is the fundamental principle underlying interim reporting?

Answer 6

Interim reports should be considered an integral part of the annual reporting period.