Simpson Corp. is an entertainment firm that derives approximately 30% of its income from the Casino Knights Division, which manages gambling facilities. As the auditor for Simpson Corp., you have recently overheard the following discussion between the controller and financial vice president.

Vice President: If we sell the Casino Knights Division, it seems ridiculous to segregate the results of the sale in the income statement. Separate categories tend to be absurd and confusing to the shareholders. I believe that we should simply report the gain on the sale as other income or expense without details.

Controller: IFRS would require that we disclose this information more fully in the income statement as a gain on discontinued operations.

Vice President: What about the walkout we had last month when employees were upset about their commission income? We had a loss as result of this walkout.

Controller: I am not sure where this item would be reported. Vice President: Oh well, it doesnt make any difference because the net effect of all these items is

immaterial, so no disclosure is necessary.

Required:

(a) Who is correct about handling the sale? (b) How should the loss due to employees walkout be reported? (c) What do you think about vice presidents proposal of accounting treatment?.

Simpson Corp. is an entertainment firm that derives approximately 30% of its income from the Casino Knights Division, which manages gambling facilities. As the auditor for Simpson Corp., you have recently overheard the following discussion between the controller and financial vice president. Vice President: If we sell the Casino Knights Division, it seems ridiculous to segregate the results of the sale in the income statement. Separate categories tend to be absurd and confusing to the shareholders. I believe that we should simply report the gain on the sale as other income or expense without details. Controller: IFRS would require that we disclose this information more fully in the income statement as a gain on discontinued operations. Vice President: What about the walkout we had last month when employees were upset about their commission income? We had a loss as result of this walkout. Controller: I am not sure where this item would be reported. Vice President: Oh well, it doesn't make any difference because the net effect of all these items is immaterial, so no disclosure is necessary. Required: (a) Who is correct about handling the sale? (b) How should the loss due to employees' walkout be reported? (c) What do you think about vice president's proposal of accounting treatment