AICPA CPA-Financial Exam - 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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Darrel

4 months ago

Nope, it's definitely both I and II!

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Phung

5 months ago

I thought it was just the assets that counted.

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Merri

5 months ago

Wait, are we sure it's both? Sounds too broad.

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Stefany

5 months ago

Definitely agree, both factors matter!

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Felix

5 months ago

I think both I and II are important for reporting.

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Leslie

5 months ago

I’m a bit confused; I thought it was just assets that mattered, but now I’m questioning if liabilities play a role too.

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Douglass

6 months ago

I’m leaning towards option C because I recall that both assets and liabilities are important for segment reporting under SFAS No. 131.

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Walker

6 months ago

I feel like we practiced a question similar to this, and it was about reporting segments based on their size relative to the whole.

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Hana

6 months ago

I think I remember that both assets and liabilities can be factors, but I'm not sure if they both need to be over 10%.

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Dalene

6 months ago

I've got a good feeling about this one. The key is understanding the 10% thresholds for both assets and liabilities.

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Charlie

6 months ago

I remember learning about segment reporting in class, but I'm drawing a blank on the specific criteria. Time to re-read the question closely.

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Margery

6 months ago

Okay, let me think this through step-by-step. I need to consider both the asset and liability thresholds.

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Melinda

6 months ago

Hmm, I'm a bit unsure about the details of SFAS No. 131. I'll need to review that standard carefully.

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Roslyn

6 months ago

This question seems straightforward, I think I can handle it.

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Jennie

11 months 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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Lavera

10 months ago

Yes, that makes sense. Reporting only one aspect wouldn't provide a clear picture of the segment's performance.

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Erick

10 months ago

So, the correct answer is C, both I and II.

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Lorita

10 months ago

Definitely, it's important to have a comprehensive view of the segment's financial position.

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James

10 months ago

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

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Alease

11 months 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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Alexia

9 months ago

User 3: C) Both I and II is the correct answer.

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Detra

10 months ago

User 2: I agree, both assets and liabilities need to meet the 10% threshold.

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Rosendo

10 months ago

User 1: I'm going with C.

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Sherly

12 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

11 months ago

Both I and II.

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Miesha

11 months ago

II only.

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Theron

11 months ago

I only.

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Sherrell

11 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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Jarod

12 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

12 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

1 year ago

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

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Annamaria

1 year 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

11 months ago

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

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Floyd

11 months ago

C) Both I and II.

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Stephen

11 months ago

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

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Veronique

11 months ago

C) Both I and II.

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Lashawnda

11 months ago

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

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Emilio

11 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

1 year ago

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

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