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Topic
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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 $ 360,000Shouldnt 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?
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