AICPA Exam CPA-Financial Topic 3 Question 35 Discussion

Choice 'a' is correct. Computing depreciation principally by the straight-line method is a GAAP method of depreciation that should be described in the 'summary of significant accounting policies.'

Choice 'b' is incorrect. Disclosing the sale of a component of a business is required (and is covered in the lecture on 'discontinued operations' in the F1 class) but is not a 'significant accounting policy.'

Choice 'c' is incorrect. Disclosing 'sales' of segments is required, but is not a 'significant accounting policy.'

Choice 'd' is incorrect. 'Estimates of future common share dividends' are not appropriate disclosures for the financial statements. They might be appropriate for the 'presidents letter to shareholders.'