[Anonymous]

Adam Corp. uses IFRS and had the following infrequent transactions during Year 1:
A $190,000 gain on reacquisition and retirement of bonds. The material event is also considered unusual for Adam Corp.
A $260,000 gain on the disposal of a component of a business. Adam continues similar operations at another location.
A $90,000 loss on the abandonment of equipment.
In its Year 1 income statement, what amount should Adam report as total infrequent net gains that are not considered extraordinary?
a. $170,000.
b. $360,000.
c. $100,000.
d. $450,000.

Explanation
Choice “b” is correct. IFRS prohibits the reporting of gains/losses as extraordinary. Therefore, none of the infrequent items are extraordinary under IFRS:
Gain on reacquisition and retirement of bonds $ 190,000
Gain on disposal of component 260,000
Loss on abandonment of equipment (90,000)
Total $ 360,000

Shouldnt gain from disposal of a component be included in Gain/Loss from discontinued operations?
Why has it been shown as a part of gain/loss from unusual and or infrequent activities in the explanation?

[Lou]

1. a gain/loss from DO would still appear on the income statement, just as a separate part of it

2. I wouldn't worry about this question that much GAAP got rid of the concept of infrequent/extraordinary gains about a year ago and Becker still hasn't removed it from there software as a concept.

AUD - 91
BEC - 91
FAR - 94
REG - 87

Done!

FAR- taken 8/11/16....now the wait begins
AUD- scheduled 9/8/16
BEC- scheduled 10/9/16
REG-scheduled 12/10/16

Live a few years like most people won't, to live the rest of your life like most people can't.

[Anonymous]

Thank you 🙂

[Author]

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