For the circumstances below, indicate whether a company can report the amount as an extraordinary item or discontinued operation. In some cases, you will have direct evidence to form your conclusion, but in some cases you will have to apply accounting judgment and present your own persuasive support based on the more general definition of extraordinary items or discontinued operations. Make a recommendation on how ABC Company should recognize the income or loss identified on its annual financial statements. You must provide support for your recommendation using the Codification, including the specific paragraph number(s) and/or glossary entry that supports your position. Your reporting should use the following outline for each item.
I. Problem Summary and Solution Recommendation
II. Issues Identified
III. Sources Used
IV. Discussion of Support
Circumstances:
A snowstorm in Corpus Christi resulted in loss of raw materials that had been stored outside.
A company had its foreign plant and equipment expropriated by the foreign government due to nationalization of all mining operations. Can it report an extraordinary loss?
A company had direct losses associated with destruction of property in the World Trade Center on 9/11/2001. Can it report an extraordinary loss?
make a recommendation on how ABC Company should recognize the income or loss identified on its annual financial statements. You must provide support for your recommendation using the Codification, including the specific paragraph number(s) and/or glossary entry that supports your position. Your reporting should use the following outline for each item.
I. Problem Summary and Solution Recommendation
II. Issues Identified
III. Sources Used
IV. Discussion of Support
CASE 1:-
A snowstorm in Corpus Christi resulted in loss of raw materials that had been stored outside.
CASE 2:-
A company had its foreign plant and equipment expropriated by the foreign government due to nationalization of all mining operations. Can it report an extraordinary loss?
CASE 3:-
A company had direct losses associated with destruction of property in the World Trade Center on 9/11/2001. Can it report an extraordinary loss?