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ysjd.patel
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Posted: 27 Feb 2009 at 13:03 \| IP Logged

Under FASB Statement of Financial Accounting Concepts

5, which of the following items would cause earnings

to differ from comprehensive income for an enterprise in an

industry not having specialized accounting principles?

a. Unrealized loss on investments classified as available-

for-sale securities.

b. Unrealized loss on investments classified as trading

securities.

c. Loss on exchange of similar assets.

d. Loss on exchange of dissimilar assets.

Ans:a

Can anyone explain how?

under SFAC 5 this is no where mentioned in beckers text.

Edited by ysjd.patel on 27 Feb 2009 at 13:05

TheRedRoost3r
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Posted: 27 Feb 2009 at 13:10 \| IP Logged

There is no way they're going to test specific authoritative literature... you'd have to study the original pronouncements (as amended) in addition to all the SABs, FINs, EITFs, SOPs, ARBs, CONs, blah blah blah.

This is how you find your answer:

Quote:

which of the following items would cause earnings

to differ from comprehensive income for an enterprise in an

industry not having specialized accounting principles?

AFS is adjusted to fair value on the balance sheet with a valuation account. The change in the valuation account is reflected in other comprehensive income, which would
cause net income to be different. The other answer choices FV adjustments would hit the income statement only.

Edited by TheRedRoost3r on 27 Feb 2009 at 13:18

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jay_usa
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Posted: 27 Feb 2009 at 13:12 \| IP Logged

Unrealized loss on available of sale securities are reported in Other comprehensive income and not Income statement.. All others B, C and D are reported in Income statement. This would cause a difference. Remember only realized gain/loss is reported in Income statement.

Hope that helps.

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ysjd.patel
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Posted: 27 Feb 2009 at 13:22 \| IP Logged

TheRedRoost3r n jay_usa

Thanx a lot for the help...:)

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