For Each of These Nonrecurring Items Give an Example and Indicate

question 78

Essay

For each of these nonrecurring items give an example and indicate (match with) the appropriate accounting treatment.

1. Extraordinary item
2. Prior period adjustment
3. Change in accounting estimate
4. Change in accounting principle
5. Discontinued operation
6. Special items
7. Comprehensive income items
8. Change in reporting entity
9. SEC Enforcement Releases

A. Shown net as a separate line item between net income and comprehensive income, no restatement.
B. Income statement line items adjusted as appropriate, gross or net, prior years restated.
C. Gross amount is part of its regular income or expense line item in income from continuing operations, prior years restated.
D. Gross amount is part of its regular income or expense line item in income from continuing operations, no restatement.
E. Shown gross as a separate line item in income from continuing operations, no restatement.F. Shown net as a separate line item between income from continuing operations and net income, prior years restated.G. Shown cumulative net as a separate line item between income from continuing operations and net income, no restatement.H. Shown net as a separate line item between income from continuing operations and net income, no restatement.I. Not in income statement, opening retained earnings is changed by net amount, no restatement.

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Definitions:

Effective Annual Interest Rate

The interest rate on a loan or financial product restated from the nominal rate as an annual rate that takes into account compounding over a given period.

Terms Of Sale

The conditions agreed upon between a buyer and a seller regarding the purchase of goods, including payment and delivery.

Credit

The ability of a borrower to obtain goods or services before payment, based on the trust that payment will be made in the future.

Cash Only Credit Policy

A policy where a company or business does not extend credit to customers and requires payment in cash at the point of sale.