Which of the Following Income and Expense Items Is NOT

question 2

Multiple Choice

Which of the following income and expense items is NOT recorded initially directly in equity?

• A) The impairment of goodwill in accordance with IAS 36 Impairment of Assets, where the entity is confident that the factors giving rise to the impairment will reverse in a future period.
• B) An increase in the fair values of land & buildings, where the revaluation method is used to account for land & buildings in accordance with IAS 16 Property, Plant & Equipment.
• C) A change in the fair value of an investment in another entity, which is classified as an available-for-sale financial asset in accordance with IAS 39 Financial Instruments: Recognition & Measurement.
• D) Foreign currency translation adjustments arising on the translation of a foreign operations financial statements from their functional currency in accordance with IAS 21 The Effects of Changes in Foreign Exchange Rates.

---

Definitions:

Gross Profit Rate

A financial ratio that compares gross profit to net sales, indicating the efficiency of production and pricing.

Operating Expenses

Expenses incurred from normal business operations such as manufacturing costs, marketing fees, and office supplies.

Sales Revenue

Income generated from selling goods or services over a period, critical for determining a company's profitability.

Gross Profit

The financial gain calculated by subtracting the cost of goods sold from the revenue generated from sales of those goods.