FAR Exam

• Under U.S. GAAP, unusual and infrequent items are not separately classified below income from continuing operations (like discontinued operations) nor are they reported net of tax.


• Instead, these items are shown as a separate line item within income from continuing operations , but before tax .


• This means the gain is included in the main operating

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Current liabilities include all obligations due within one year (or the operating cycle if longer). Let’s break down the balances:

To be a current asset, the cash or benefit must be realized within one year or the operating cycle, whichever is longer. Since it’s beyond that, it’s a noncurrent asset.

Choice "C" is correct. The single-step income statement will include in total revenues all sales of goods, services, and rentals. Purchase discounts are not included in revenue, but instead reduce cost of goods sold. The recovery of accounts written off does not hit the revenue account.

This gain resulted in the recognition of an asset not in the ordinary course of business, but it did not qualify as part of discontinued operations.