On December 2, 20X1, Flint Corp.'s board of directors voted to discontinue operations of its frozen food
division and to sell the division's assets on the open market as soon as possible. The division reported net
operating losses of $20,000 in December and $30,000 in January. On February 26, 20X2, sale of the
division's assets resulted in a gain of $90,000. Assuming that the frozen foods division qualifies as a
component of the business and ignoring income taxes, what amount of gain/loss from discontinued
operations should Flint recognize in its income statement for 20X2?
On January 2, 1991, Air, Inc. agreed to pay its former president $300,000 under a deferred compensation
arrangement. Air should have recorded this expense in 1990 but did not do so. Air's reported income tax
expense would have been $70,000 lower in 1990 had it properly accrued this deferred compensation in its
December 31,1991, financial statements, Air should adjust the beginning balance of its retained earnings
by a:
A transaction that is unusual in nature and infrequent in occurrence should be reported separately as a
component of income:
How should the effect of a change in accounting principle that is inseparable from the effect of a change in
accounting estimate be reported?
Which of the following should be reported as a prior period adjustment?
