21) The gain or loss on the disposal of a business segment is shown on the income statement as:
A) an extraordinary item.
B) part of discontinued operations
C) part of income from operations.
D) other gains or losses.
22) The loss from the disposal of a segment of a business is called:
A) an extraordinary loss.
B) other expense.
C) other loss.
D) loss on sale of discontinued operations.
23) The loss incurred as a result of the impairment of goodwill should be reported as:
A) part of discontinued operations.
B) an operating expense.
C) other expenses and losses.
D) an extraordinary item.
24) Katherine's Fashions is going to discontinue one of its manufacturing divisions. The division's assets with a book value of $1,000,000 are sold for $750,000. The division generated an operating loss of $145,000 after the decision was made to discontinue the segment. Ignoring income taxes, what total amount should be reported on the income statement as discontinued operations?
A) $105,000 loss
B) $250,000 loss
C) $395,000 loss
D) $145,000 gain
25) The following items are extraordinary items EXCEPT:
A) loss due to hurricane damage of plant in Wisconsin.
B) loss of vehicles due to damage from blizzard in Southern California.
C) loss due to expropriation of company assets by a foreign government.
D) loss on lawsuit.
26) Which of the following would be considered an extraordinary item?
A) Losses from a labor dispute
B) Losses from a natural disaster
C) Writing-down inventory to lower-of-cost or market
D) Losses from the sale of property
27) If an item is unusual but not infrequent it is:
A) reported net of tax as Other Gains and Losses.
B) reported at its gross amount as Other Gains and Losses.
C) disclosed as a note to the financial statements.
D) reported as an extraordinary item.
28) An extraordinary item is:
A) both infrequent in occurrence and unusual in nature for the company.
B) unusual in nature for the company only.
C) infrequent in occurrence for the company only.
D) commonly reported by companies following U.S. Generally Accepted Accounting Principles.
29) Modern Detailing, Inc. has incurred a $50,000 loss on property due to an earthquake. Earthquakes are rare in this region. What amount will be reported for this loss on the company's income statement, assuming a 30% tax rate? How will the loss be classified on the income statement?
A) Other Losses, $50,000
B) Extraordinary Loss, $35,000
C) Extraordinary Loss, $15,000
D) Other Losses, $35,000
30) Extraordinary items:
A) include the expropriation of a company's assets by a foreign government.
B) include the loss from the sale or exchange of equipment.
C) are treated the same under IFRS and GAAP.
D) include the gains and losses due to management restructuring.