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AICPA CPA-Financial Exam - Topic 2 Question 122 Discussion

Which of the following information should be included in Melay, Inc.'s 1992 summary of significant accounting policies?
A) Property, plant, and equipment is recorded at cost with depreciation computed principally by the straight-line method.
B) During 1992, the Delay component was sold.
C) Business segment 1992 sales are Alay $1M, Belay $2M, and Celay $3M.
D) Future common share dividends are expected to approximate 60% of earnings.

AICPA CPA-Financial Exam - Topic 2 Question 122 Discussion

Actual exam question for AICPA's CPA-Financial exam
Question #: 122
Topic #: 2
[All CPA-Financial Questions]

Which of the following information should be included in Melay, Inc.'s 1992 summary of significant accounting policies?

Show Suggested Answer Hide Answer
Suggested Answer: A

Choice 'a' is correct. Computing depreciation principally by the straight-line method is a GAAP method of depreciation that should be described in the 'summary of significant accounting policies.'

Choice 'b' is incorrect. Disclosing the sale of a component of a business is required (and is covered in the lecture on 'discontinued operations' in the F1 class) but is not a 'significant accounting policy.'

Choice 'c' is incorrect. Disclosing 'sales' of segments is required, but is not a 'significant accounting policy.'

Choice 'd' is incorrect. 'Estimates of future common share dividends' are not appropriate disclosures for the financial statements. They might be appropriate for the 'presidents letter to shareholders.'


by Phung at Mar 08, 2026, 04:23 PM

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Timothy
7 hours ago
I agree, A is key. Depreciation method matters for clarity.
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Glennis
5 days ago
I think A is essential. It shows how assets are valued.
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Launa
11 days ago
Not sure if future dividends should be in there, seems speculative.
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Yvonne
16 days ago
C is just basic info, not really significant policy.
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Evangelina
2 months ago
Wait, they sold the Delay component? That's surprising!
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Merilyn
2 months ago
I think D is also crucial to include.
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Rosalind
2 months ago
A is definitely important for the summary!
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Noe
3 months ago
C is important too, shows the sales breakdown!
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Stevie
3 months ago
Not sure about D, that seems overly optimistic.
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Dino
3 months ago
Wait, they sold the Delay component? That's surprising!
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Lynelle
3 months ago
I agree, A is essential for clarity.
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Jesusita
3 months ago
A is definitely a must-have for the summary!
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Myra
3 months ago
I remember discussing the importance of depreciation methods in class, so I’m leaning towards A being the best choice. But I’m not completely confident about the others.
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Veda
4 months ago
I feel like option C might be relevant too, but it seems more like operational data rather than a policy. I need to double-check what qualifies as significant accounting policies.
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Karol
4 months ago
I'm not so sure about option D. It seems more like a forecast rather than a policy. I remember a practice question where we had to distinguish between policies and projections.
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Natalya
4 months ago
I think option A is definitely something that should be included since it talks about the accounting methods used, which is typical for significant accounting policies.
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