Find the correct option, the option that explains the reason for reporting the irregular items separately in the income statement.

Question

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Answer 1

Question

Chapter 12, Problem 1STQ

To determine

Find the correct option, the option that explains the reason for reporting the irregular items separately in the income statement.

Expert Solution & Answer

Answer to Problem 1STQ

The correct answer is option (b).

Explanation of Solution

Unusual or infrequent items: These are nonrecurring transactions that either do not repeat frequently, or unusual in nature, and hence, are reported separately from the results of business operations. Gains or losses from sale of plant assets, impairment losses, write-down value of plant assets, and losses from labor strikes are some common examples.

Justification for correct answer: The gains or losses from unusual or infrequent items increase or decrease the net income temporarily. This temporary changes might be used by investors to predict future earnings. So, companies report the gains or losses from unusual or infrequent items separately on the income statement, to avoid the incorrect forecast or wrong interpretation of future earnings from ongoing operations by the users. So, option (b) is correct answer.

Justification for incorrect answers:

Option (a) is incorrect answer because earnings per share is reported for income from continuing operations and discontinued operations separately. So, either gains or losses from the irregular items would not affect the earnings per share.
Option (c) is incorrect answer because the unusual or infrequent items are not reported on a net-of-tax but the income tax effect of these items is reported along with the income tax expense of recurring items.
Option (d) is incorrect answer because unusual losses are generally infrequent and cannot be predicted to prevent them.

Conclusion

Hence, option (b) is the correct answer.

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Oasis Furnishings reported the following information for the year ending December 31, 2023: • • • • Credit sales during the year: $2,750,000 Accounts receivable at year-end: $400,000 Allowance for doubtful accounts at year-end: $45,000 Bad debt expense recorded during the year: $18,000 What amount will Oasis Furnishings report on its balance sheet as the net realizable value (NRV) of accounts receivable? a) $355,000 b) $400,000 c) $382,000 d) $318,000

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Pastner Brands is a calendar-year firm with operations in several countries. As part of its executive compensation plan, at January 1, 2024, the company issued 480,000 executive stock options permitting executives to buy 480,000 shares of Pastner stock for $38 per share. One-fourth of the options vest in each of the next four years beginning at December 31, 2024 (graded vesting). Pastner elects to separate the total award into four groups (or tranches) according to the year in which they vest and measures the compensation cost for each vesting date as a separate award. The fair value of each tranche is estimated at January 1, 2024, as follows: Amount Fair Value Vesting Date December 31, 2024 Vesting per Option. 25% $ 3.90 December 31, 2025 25% $ 4.40 25% $ 4.90 25% $ 5.40 December 31, 2026 December 31, 2027 Required: 1. Determine the compensation expense related to the options to be recorded each year 2024-2027, assuming Pastner allocates the compensation cost for each of the four…

Answer 2

Question

Chapter 12, Problem 1STQ

To determine

Find the correct option, the option that explains the reason for reporting the irregular items separately in the income statement.

Expert Solution & Answer

Answer to Problem 1STQ

The correct answer is option (b).

Explanation of Solution

Unusual or infrequent items: These are nonrecurring transactions that either do not repeat frequently, or unusual in nature, and hence, are reported separately from the results of business operations. Gains or losses from sale of plant assets, impairment losses, write-down value of plant assets, and losses from labor strikes are some common examples.

Justification for correct answer: The gains or losses from unusual or infrequent items increase or decrease the net income temporarily. This temporary changes might be used by investors to predict future earnings. So, companies report the gains or losses from unusual or infrequent items separately on the income statement, to avoid the incorrect forecast or wrong interpretation of future earnings from ongoing operations by the users. So, option (b) is correct answer.

Justification for incorrect answers:

Option (a) is incorrect answer because earnings per share is reported for income from continuing operations and discontinued operations separately. So, either gains or losses from the irregular items would not affect the earnings per share.
Option (c) is incorrect answer because the unusual or infrequent items are not reported on a net-of-tax but the income tax effect of these items is reported along with the income tax expense of recurring items.
Option (d) is incorrect answer because unusual losses are generally infrequent and cannot be predicted to prevent them.

Conclusion

Hence, option (b) is the correct answer.

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Answer 3

Question

Chapter 12, Problem 1STQ

To determine

Find the correct option, the option that explains the reason for reporting the irregular items separately in the income statement.

Expert Solution & Answer

Answer to Problem 1STQ

The correct answer is option (b).

Explanation of Solution

Unusual or infrequent items: These are nonrecurring transactions that either do not repeat frequently, or unusual in nature, and hence, are reported separately from the results of business operations. Gains or losses from sale of plant assets, impairment losses, write-down value of plant assets, and losses from labor strikes are some common examples.

Justification for correct answer: The gains or losses from unusual or infrequent items increase or decrease the net income temporarily. This temporary changes might be used by investors to predict future earnings. So, companies report the gains or losses from unusual or infrequent items separately on the income statement, to avoid the incorrect forecast or wrong interpretation of future earnings from ongoing operations by the users. So, option (b) is correct answer.

Justification for incorrect answers:

Option (a) is incorrect answer because earnings per share is reported for income from continuing operations and discontinued operations separately. So, either gains or losses from the irregular items would not affect the earnings per share.
Option (c) is incorrect answer because the unusual or infrequent items are not reported on a net-of-tax but the income tax effect of these items is reported along with the income tax expense of recurring items.
Option (d) is incorrect answer because unusual losses are generally infrequent and cannot be predicted to prevent them.

Conclusion

Hence, option (b) is the correct answer.

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Answer 4

Question

Chapter 12, Problem 1STQ

To determine

Find the correct option, the option that explains the reason for reporting the irregular items separately in the income statement.

Expert Solution & Answer

Answer to Problem 1STQ

The correct answer is option (b).

Explanation of Solution

Unusual or infrequent items: These are nonrecurring transactions that either do not repeat frequently, or unusual in nature, and hence, are reported separately from the results of business operations. Gains or losses from sale of plant assets, impairment losses, write-down value of plant assets, and losses from labor strikes are some common examples.

Justification for correct answer: The gains or losses from unusual or infrequent items increase or decrease the net income temporarily. This temporary changes might be used by investors to predict future earnings. So, companies report the gains or losses from unusual or infrequent items separately on the income statement, to avoid the incorrect forecast or wrong interpretation of future earnings from ongoing operations by the users. So, option (b) is correct answer.

Justification for incorrect answers:

Option (a) is incorrect answer because earnings per share is reported for income from continuing operations and discontinued operations separately. So, either gains or losses from the irregular items would not affect the earnings per share.
Option (c) is incorrect answer because the unusual or infrequent items are not reported on a net-of-tax but the income tax effect of these items is reported along with the income tax expense of recurring items.
Option (d) is incorrect answer because unusual losses are generally infrequent and cannot be predicted to prevent them.

Conclusion

Hence, option (b) is the correct answer.

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Answer 5

Chapter 12, Problem 1STQ

To determine

Find the correct option, the option that explains the reason for reporting the irregular items separately in the income statement.

Expert Solution & Answer

Answer to Problem 1STQ

The correct answer is option (b).

Explanation of Solution

Unusual or infrequent items: These are nonrecurring transactions that either do not repeat frequently, or unusual in nature, and hence, are reported separately from the results of business operations. Gains or losses from sale of plant assets, impairment losses, write-down value of plant assets, and losses from labor strikes are some common examples.

Justification for correct answer: The gains or losses from unusual or infrequent items increase or decrease the net income temporarily. This temporary changes might be used by investors to predict future earnings. So, companies report the gains or losses from unusual or infrequent items separately on the income statement, to avoid the incorrect forecast or wrong interpretation of future earnings from ongoing operations by the users. So, option (b) is correct answer.

Justification for incorrect answers:

Option (a) is incorrect answer because earnings per share is reported for income from continuing operations and discontinued operations separately. So, either gains or losses from the irregular items would not affect the earnings per share.
Option (c) is incorrect answer because the unusual or infrequent items are not reported on a net-of-tax but the income tax effect of these items is reported along with the income tax expense of recurring items.
Option (d) is incorrect answer because unusual losses are generally infrequent and cannot be predicted to prevent them.

Conclusion

Hence, option (b) is the correct answer.

Answer 6

Chapter 12, Problem 1STQ

To determine

Find the correct option, the option that explains the reason for reporting the irregular items separately in the income statement.

Expert Solution & Answer

Answer to Problem 1STQ

The correct answer is option (b).

Explanation of Solution

Unusual or infrequent items: These are nonrecurring transactions that either do not repeat frequently, or unusual in nature, and hence, are reported separately from the results of business operations. Gains or losses from sale of plant assets, impairment losses, write-down value of plant assets, and losses from labor strikes are some common examples.

Justification for correct answer: The gains or losses from unusual or infrequent items increase or decrease the net income temporarily. This temporary changes might be used by investors to predict future earnings. So, companies report the gains or losses from unusual or infrequent items separately on the income statement, to avoid the incorrect forecast or wrong interpretation of future earnings from ongoing operations by the users. So, option (b) is correct answer.

Justification for incorrect answers:

Option (a) is incorrect answer because earnings per share is reported for income from continuing operations and discontinued operations separately. So, either gains or losses from the irregular items would not affect the earnings per share.
Option (c) is incorrect answer because the unusual or infrequent items are not reported on a net-of-tax but the income tax effect of these items is reported along with the income tax expense of recurring items.
Option (d) is incorrect answer because unusual losses are generally infrequent and cannot be predicted to prevent them.

Conclusion

Hence, option (b) is the correct answer.

Answer 7

Chapter 12, Problem 1STQ

To determine

Find the correct option, the option that explains the reason for reporting the irregular items separately in the income statement.

Answer 8

Expert Solution & Answer

Answer to Problem 1STQ

The correct answer is option (b).

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Explanation of Solution

Unusual or infrequent items: These are nonrecurring transactions that either do not repeat frequently, or unusual in nature, and hence, are reported separately from the results of business operations. Gains or losses from sale of plant assets, impairment losses, write-down value of plant assets, and losses from labor strikes are some common examples.

Justification for correct answer: The gains or losses from unusual or infrequent items increase or decrease the net income temporarily. This temporary changes might be used by investors to predict future earnings. So, companies report the gains or losses from unusual or infrequent items separately on the income statement, to avoid the incorrect forecast or wrong interpretation of future earnings from ongoing operations by the users. So, option (b) is correct answer.

Justification for incorrect answers:

Option (a) is incorrect answer because earnings per share is reported for income from continuing operations and discontinued operations separately. So, either gains or losses from the irregular items would not affect the earnings per share.
Option (c) is incorrect answer because the unusual or infrequent items are not reported on a net-of-tax but the income tax effect of these items is reported along with the income tax expense of recurring items.
Option (d) is incorrect answer because unusual losses are generally infrequent and cannot be predicted to prevent them.