Explore BrainMass

Explore BrainMass

    Extraordinary Items, Income Statements, and Revenue Recognition

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    1. What are the requirements for extraordinary items? What are some examples of extraordinary items?

    2. Which format of income statement is the most widely used? Why?

    3. Why are there so many revenue recognition methods? Why is it so subjective?

    4. Why do construction companies use the percentage of completion method of recognizing revenue?

    © BrainMass Inc. brainmass.com June 3, 2020, 10:48 pm ad1c9bdddf

    Solution Preview

    1. The requirements for an item to be extraordinary for financial reporting purposes are:
    i. "The nature of the event or transaction is unusual, and
    ii. "The occurrence of the event or transaction is unusual" (Jarnagin, 2002, p. 40).
    Examples of extraordinary items are insurance recoveries, gains and losses on discontinued operations, and debt restructuring.

    2. The most common income ...

    Solution Summary

    Various bookkeeping concepts are explained.