A Company Incurs a Loss Due to Restructuring

question 28

Multiple Choice

A company incurs a loss due to restructuring. This is the first time the company has experienced a restructuring. The loss from this event would be shown as:

• A)a normal business occurrence requiring an adjustment to the beginning balance in Retained Earnings.
• B) a prior-period adjustment.
• C)an extraordinary item.
• D)other gains and losses.

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Definitions:

Consolidated Income Statement

A financial statement that combines the income, expenses, and profits of a parent company and its subsidiaries to present the overall performance.

Subsidiary Sold Land

An event where a company owned by another company sells a piece of real estate.

Consolidated Sales

The total sales revenue of a parent company and its subsidiaries, reported as one figure in the consolidated financial statements.

Normal Markup

The standard percentage added to the cost of goods to determine their selling price.