Which of the following is an extraordinary item? a. Loss on abandonment of prope

Question

Which of the following is an extraordinary item?

a. Loss on abandonment of property
b. Gain on disposal of a business segment
c. Write-down of deferred research and development costs
d. None of the above

Which of the following would result in a difference between Net Income and Cash Flow from Operations?

a. Sale of machinery for $50,000 with a net book value of $35,000
b. Purchase of supplies for cash
c. Sale of services to customers for cash
d. Acquisition of land with simultaneous issuance of long-term note

Which of the following is an extraordinary item?

a. Loss on abandonment of property
b. Gain on disposal of a business segment
c. Write-down of deferred research and development costs
d. None of the above

Explanation / Answer

Ans : optionb

Reason: selling of business segment doesnt come in ordinary course of business, it only happens incase of extraordinary situation so it is considered as extraordinary item.

Ans 2: option a

Reason : net income will increase by $ 15000 and cashflow from investing activity will increase with the full sale proceeds. i.e. $50000

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