Day 4

Question 1

Calculation: Discontinued Operations

Answer 1

1. Results of operations - for that period only
2. Gain or loss on disposal - in the period it occurred
3. Impairment loss

MCQ-00045

Question 2

Example transaction of discontinued operations

Answer 2

Planned and approved sale of a segment

MCQ-06946

Question 3

What costs are included in Discontinued Operations?

Answer 3

1. Employee relocation costs as a result of the disposal
2. Additional pension costs associated with the disposal
3. Included operating losses of the current period up to the date the decision to dispose was made

MCQ-00093

Question 4

ABC Inc based warranty cost on $100 per unit in year 1. In year 2, the estimate should have been $110 per unit. The effect of the $10 estimate difference should be reported:

Answer 4

Rule: changes in estimates affect only the current and future periods (never prior periods or RE)

In year 2, as income from continuing operations

MCQ-00081

Question 5

How should the effect of a change in accounting principal that is inseparable from the effect of a change in accounting estimate be reported?

Answer 5

As a component of income from continuing operations

The reporting treatment for the overall effect is a change in accounting estimate

MCQ-00038