AICPA CPA-Financial Exam - Topic 3 Question 39 Discussion

Actual exam question for AICPA's CPA-Financial exam

Question #: 39
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?

A$12,000

B$6,000

C$4,000

D$0

Show Suggested Answer

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.

by Jerry at May 07, 2022, 04:57 AM

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Trinidad

4 months ago

I thought equipment sales had different rules.

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Lashandra

4 months ago

Nope, it’s definitely $12,000. No doubt about it!

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Xenia

4 months ago

Wait, are you sure it’s not just $6,000?

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Portia

4 months ago

Totally agree, it’s all taxable income!

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Matt

5 months ago

Buzz should report the full $12,000 gain.

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Karl

5 months ago

The Drive Box needs to be powered down? That's an interesting detail. I'll make sure to verify that before attempting the drive replacement.

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Art

5 months ago

I think the answer is streaming telemetry, since it's built for real-time data and fits the push model perfectly.

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Linn

5 months ago

I've got this one! The Monitoring service and the Configuration Logging service are the two FMA services that have an extra database connection besides the Site database.

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Owen

5 months ago

Okay, I think I've got this. The key is to look at the highest risk test or bug report for each subsystem, since that will determine the overall risk level. Time to crunch the numbers!

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