As an auditor for Bernard and Thomas, you are responsible for determining the pr

Question

As an auditor for Bernard and Thomas, you are responsible for determining the proper classification of income statement items in the audit of California Sports Grill.

Required:

Select whether each of the following items should be classified as discontinued operations, other revenues, or other expenses.

Items Description a. One of the company’s restaurants was destroyed in a forest fire that raged through Southern California. Uninsured losses from the fire are estimated to be $450,000. b. The company owns and operates over 40 restaurants but sold one restaurant this year at a gain of $650,000.

Explanation / Answer

a. One of the company’s restaurants was destroyed in a forest fire that raged through Southern California. Uninsured losses from the fire are estimated to be $450,000. - Other expenses

b. The company owns and operates over 40 restaurants but sold one restaurant this year at a gain of $650,000. - Other revenues

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