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Question 1

A loss on discontinued operations can consist of what three things?

Answer 1

1) An impairment loss, 2) A gain/loss from actual operations, and 3) A gain/loss on disposal.

Question 2

Comprehensive Income equals?

Answer 2

Comprehensive Income = Net Income plus Other Comprehensive Income

Question 3

Extraordinary Items are defined as?

Answer 3

Extraordinary items are defined as unusual and infrequent

Question 4

Accounting changes are broadly classified as:

Answer 4

1) Changes in accounting estimate, 2) Changes in accounting principle, and 3) Changes in accounting entity.

Question 5

Income from Continuing Operations equals?

Answer 5

Income from Continuing Operations equals Operating Income plus Non-Operating Income.

Question 6

What is the difference between Probable, Reasonably Possible, and Remote?

Answer 6

Probable - Based on professional judgment, the probability of occurrence is considered very high or a near certainty.

Reasonably Possible - Based on professional judgement, the probability of occurrence is neither very high nor remote. In other words, when probability of occurrence is considered along a spectrum of possibilities, the probability of occurrence is not at either end of the spectrum, but is in the large middle section of the spectrum.

Remote - Based on professional judgment, the probability of occurrence is considered to be very low, or as the title implies, remote.

Question 7

Explain the gross profit method of inventory valuation (also called the gross margin method).

Answer 7

Gross Margin Method for Inventory – The gross margin method (also called the gross profit method) is not allowed for annual reporting purposes, but can be used for interim reporting. This method uses the gross margin percentage to estimate cost of goods sold from purchase information. The estimated cost of goods sold then is used to estimate ending inventory for the quarter without having to count inventory. Footnote disclosure of the use of this method is required, Wiley, pg. 844

Question 8

Under IFRS, revenue transactions are divided into what four categories?

Answer 8

1. Sale of Goods
2. Rendering of Services
3. Revenue from Interest, Royalties, and Dividends
4. Construction Contracts