Question

Popson Inc. incurred a material loss that was unusual in character. This loss should be reported as: Multiple Choice a discontinued operation. a line item between income from continuing operations and income from discontinued operations. a line item within income from continuing operations. a line item in the retained earnings statement.

Answer 1

Answer:

a line item within income from continuing operations.

Explanation:

Given that, from the above question, the company which is Popson Inc. incurred material loss when in operation, the loss should be reported as: a line item within income from continue operation, due to following reasons:

1. Aside extraordinary items, gains and loss, expenditures and revenues from discountinued operation in business, all other items will be recorded in a line item within income from continuing operations.

2. Based on International Financial Reporting Standards (IFRS) and the Generally Accepted Accounting Principles (GAAP) material losses that are unusual in character incurred by businesses are reported, as it gives auditors or financial experts clarity on which profits or losses are not related to the operation of the business.

Hence, Popson Inc. incurred a material loss that was unusual in character, should be reported as: a line item within income from continuing operations.

Answer 2

Answer:

A line item within income from continuing operations.

Explanation:

In the United States of America, the International Financial Reporting Standards (IFRS) and the Generally Accepted Accounting Principles (GAAP) usually considers or acknowledges material losses that are unusual in character incurred by businesses. It is necessary to report items that are unusual in character because it gives auditors or financial experts clarity on which profits or losses are not related to the operation of the business.

Since the material loss incurred by Popson Inc. was unusual in character. Hence, this loss should be reported as a line item within income from continuing operations.

The income from continuing operations is a net income from an organization's continuous operation.