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AICPA Exam CPA-Financial Topic 3 Question 39 Discussion
Actual exam question for
AICPA's
CPA Financial Accounting and Reporting exam
Question #: 39
Topic #: 3
[All CPA Financial Accounting and Reporting Questions]
Topic #: 3
During the second quarter of 1988, Buzz Company sold a piece of equipment at a $12,000 gain. What portion of the gain should Buzz report in its income statement for the second quarter of 1988?
Suggested Answer:
A
Choice 'a' is correct. $12,000.
Rule: The entire amount of an 'extraordinary gain or loss' or an 'unusual or infrequently occurring item,' e.g., a gain or loss from sale of fixed assets, should be reported during the period (quarter) incurred.
Choices 'b', 'c', and 'd' are incorrect. The full gain should be reported in the second quarter when it occurred.
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