ACCT 304 Final Exam Intermediate Accounting I

ACCT 304 Final Exam Intermediate Accounting I

ACCT 304 Final Exam:

Income from continuing operations sometimes includes gains from non operating activities.

Income from continuing operations is an after-tax number consisting of revenues, expenses, gains, and losses.

Income from continuing operations equals net income only in the absence of separately reported items.

Intraperiod tax allocation is the process of associating income tax effects with the income statement components that create those effects.

If the effective tax rate is 40%, a $200,000 before-tax extraordinary gain would increase net income by $120,000.

If General Motors ceased production of the Corvette, it would report any material gains or losses that would result under discontinued operations.

Discontinued operations require reclassification of prior years’ income statements but no change in prior years’ net income.

Operating income or loss from discontinued operations up to the disposal date is separately reported.

The measurement and disposal dates of discontinued operations must fall within the same fiscal year.

If an overall loss from discontinued operations is expected, then the loss is reported in the year in which the measurement date falls.

Estimated gains from discontinued operations can be reported in the measurement year only to the extent of estimated losses.

An item must meet the subjective criteria of being both unusual and infrequent to be reported as extraordinary.

The definition of what constitutes an extraordinary item should be independent of the operating environment