AICPA Exam CPA-Financial Topic 1 Question 108 Discussion

Actual exam question for AICPA's CPA-Financial exam

Question #: 108
Topic #: 1

Which of the following factors determines whether an identified segment of an enterprise should be reported in the enterprise's financial statements under SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information?

1. The segment's assets constitute more than 10% of the combined assets of all operating segments.

2. The segment's liabilities constitute more than 10% of the combined liabilities of all operating segments.

AI only.

BII only.

CBoth I and II.

DNeither I nor II.

Show Suggested Answer

Suggested Answer: B

Choice 'B' is correct. If comparative FS are issued, restate prior year's FS. If comparative FS are not issued, restate prior year-end's retained earnings account by 'adjusting' (net of tax) the opening balance of the current retained earnings statement. Note that when an error is corrected, retroactive restatement is used, and when there is a change in accounting principle, retrospective restatement is done. However, this is only a difference in terminology.

by Carmen at Mar 08, 2025, 03:50 AM

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Jennie

16 days ago

The correct answer is C, no doubt about it. If you think about it, the enterprise needs to report on both the assets and liabilities of a segment to give a complete picture. Anything less would be like trying to bake a cake with just the flour or just the eggs - it's just not going to turn out right!

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James

2 days ago

I agree, the enterprise should report both the assets and liabilities of a segment for a complete picture.

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Alease

23 days ago

I'm going with C. After all, the question says 'determines whether an identified segment should be reported', and that means both assets and liabilities need to meet the 10% threshold.

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Sherly

1 months ago

C is the way to go! You can't just look at the assets or the liabilities, you need to consider both. It's like trying to balance a see-saw with just one side - it just won't work.

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Darnell

7 days ago

Both I and II.

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Miesha

8 days ago

II only.

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Theron

15 days ago

I only.

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Sherrell

18 days ago

C is the way to go! You can't just look at the assets or the liabilities, you need to consider both. It's like trying to balance a see-saw with just one side - it just won't work.

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Jarod

1 months ago

Hmm, this is a tricky one. I was leaning towards D, but now I'm not so sure. I need to review the SFAS No. 131 guidelines again.

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Lavera

2 months ago

I'm not sure, but I think it makes sense to include both factors for a more comprehensive view.

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Niesha

2 months ago

I agree with Latia, because both assets and liabilities are important factors to consider.

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Annamaria

2 months ago

I think the correct answer is C. Both the segment's assets and liabilities need to be more than 10% of the combined assets and liabilities, respectively, for it to be reported under SFAS No. 131.

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Michael

19 days ago

That's correct. Both criteria must be met for the segment to be reported in the financial statements.

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Floyd

22 days ago

C) Both I and II.

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Stephen

23 days ago

So, if only one of the factors meets the 10% threshold, the segment wouldn't be reported?

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Veronique

26 days ago

C) Both I and II.

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Lashawnda

1 months ago

I agree, it makes sense that both factors need to be considered for reporting purposes.

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Emilio

1 months ago

I think the correct answer is C. Both the segment's assets and liabilities need to be more than 10% of the combined assets and liabilities, respectively, for it to be reported under SFAS No. 131.

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Latia

2 months ago

I think the answer is C) Both I and II.

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