Question : 3.Given below several items (1 through 4) that will be : 1241761

3.Given below are several items (1 through 4) that will be reported on a company’s financial statements. Select the letter of the proper financial statement reporting section listed as a through f. You may use each letter more than once or not at all.

Financial Statement Reporting Sections

a.Income from continuing operations section of the income statement

b.Discontinued operations section of the income statement

c.Extraordinary items section of the income statement

d.Cumulative effect of a change in accounting principle section of the income statement

e.A separate comprehensive income item

f.Not reported on the income statement or comprehensive income statement

_____1.A gain due to an early payoff of debt that had a high interest rate

_____2.Another loss of plant assets incurred by a company whose distribution warehouse is located on an island that has experienced severe flooding three times in the past 5 years

_____3.A $1 billion loss due to a permanent shutdown of the company’s only subsidiary, Coastal, Inc, triggered by poor product development

_____4.A foreign currency translation gain at yearend

4.Select the financial statement section (a through f) in which each of the items listed in 1 through 6 would be reported by writing the letter of the best answer in the space provided.

Financial Statement Sections

a.Income from continuing operations section of the income statement

b.Discontinued operations section of the income statement

c.Extraordinary items section of the income statement

d.Cumulative effect of a change in accounting principle section of the income statement

e.Balance sheet

f.Not necessary to report on a financial statement

1.____Government expropriation of plant location in Venezuela

2.____Financial effects of the adoption of a new FASB standard regarding post-retirement benefits

3.____Financial effects of dropping a company’s domestic product division

4.____Unusual and infrequent gain from a plant explosion

5.____Unrealized gain/loss from trading securities

6.____Interest revenue

5.Select the financial statement section (a through g) in which each of the items listed in 1 through 5 below would properly be reported by writing the letter of the best answer in the space provided.

Financial Statement Sections

a.

Income from continuing operations section of the income statement

b.

Discontinued operations section of the income statement

c.

Extraordinary items section of the income statement

d.

Cumulative effect of a change in accounting principle section of the income statement

e.

Statement of shareholders’ equity

f.

Balance sheet

g.

Not necessary to report on a financial statement

1._____Declared cash dividends for the first time in the history of the corporation

2. _____Incurred a gain on the sale of four Preston franchise stores, but held onto the Little Steps chain

3. _____Incurred a huge loss from a hurricane that destroyed the company’s Louisiana packaging plant; no previous hurricanes have occurred at this location

4. _____Recorded interest income for the year

5. _____Incurred $14,000 to replace the company’s office products (letterhead, envelopes, pens, etc.) with a new logo to promote a new product line