Chapter 1 Interim financial reporting

Question 1

Conceptually, interim reporting emphasizes what qualitative characteristic?

Answer 1

Timeliness

Question 2

For interim reporting, what should be used to determine a companies tax provision?

Answer 2

A company should use the effective tax rate expected to be applicable for the full year as estimated at the end of the second quarter.

Question 3

How should interim income tax expense be determined?

Answer 3

One should use the estimated annual effective tax rate applied to the year-to-date income before taxes minus the tax expense recognized in previous interim periods.

Question 4

When should a loss be recorded?

Answer 4

When a loss is probable and estimable, the expected loss must be recorded in full.

Question 5

When a corp. uses lower cost of market method to value its inventory in annual statements. How should it value its inventory in its interim financial statements?

Answer 5

Inventory losses generally should be recognized in the interim statements

Question 6

How are discontinued operations that occur midyear initially reported?

Answer 6

They are included in net income and disclosed in the notes to interim financial statements.