AICPA CPA-Financial Exam - Topic 3 Question 43 Discussion

Actual exam question for AICPA's CPA-Financial exam

Question #: 43
Topic #: 3

In 1990, Teller Co. incurred losses arising from its guilty plea in its first antitrust action, and from a substantial increase in production costs caused when a major supplier's workers went on strike. Which of these losses should be reported as an extraordinary item?

AOption A

BOption B

COption C

DOption D

Show Suggested Answer

Suggested Answer: C

Choice 'c' is correct. Yes - No.

Rule: Losses arising from a company's first (and probably 'last') 'anti-trust' action are unusual and extraordinary and should be reported as an extraordinary item. Losses resulting from additional costs caused by a strike at a major supplier or even at one's own company are not extraordinary and should be disclosed as a separate component of 'income from continuing operations.'

by Sharee at May 04, 2022, 10:43 AM

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