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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Lavera

3 days 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

5 days ago

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

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Annamaria

6 days 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

8 days ago

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

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