AICPA Exam CPA-Financial Topic 2 Question 72 Discussion

Actual exam question for AICPA's CPA-Financial exam

Question #: 72
Topic #: 2

According to the FASB conceptual framework, which of the following situations violates the concept of reliability?

AData on segments having the same expected risks and growth rates are reported to analysts estimating future profits.

BFinancial statements are issued nine months late.

CManagement reports to stockholders regularly refer to new projects undertaken, but the financial statements never report project results.

DFinancial statements include property with a carrying amount increased to management's estimate of market value.

Show Suggested Answer

Suggested Answer: B

Choice 'b' is correct. $120,000 expense included in the determination of net income or loss for the sixmonth interim period ended June 30, 1991.

by Rosio at Jul 27, 2023, 08:09 PM

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Anthony

6 days ago

I agree, option D is the right answer. Adjusting asset values to management's estimates is subjective and lacks verifiability, which is a key component of reliability.

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Lai

7 days ago

Option D seems to be the correct answer. Reporting property at a market value estimate rather than historical cost violates the reliability concept of the FASB framework.

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