AICPA Exam CPA-Financial Topic 1 Question 51 Discussion

Actual exam question for AICPA's CPA-Financial exam

Question #: 51
Topic #: 1

Under FASB Statement of Financial Accounting Concepts #5, which of the following items would cause earnings to differ from comprehensive income for an enterprise in an industry not having specialized accounting principles?

AUnrealized loss on investments in noncurrent marketable equity securities available for sale.

BUnrealized loss on investments in current marketable equity securities held for trading.

CLoss on exchange of nonmonetary assets without commercial substance.

DLoss on exchange of nonmonetary assets with commercial substance.

Show Suggested Answer

Suggested Answer: A

Choice 'a' is correct. Unrealized loss on investments in marketable equity securities available for sale would cause earnings to differ from comprehensive income for an enterprise in an industry not having specialized accounting principles.

Rule: FAC 5 defines 'earnings' for a period to exclude certain cumulative accounting adjustments and other non-owner changes in equity (such as changes in market value of marketable securities available for sale) that are included in comprehensive income for a period.

by Dorothy at May 06, 2022, 09:14 PM

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