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q1m1 Becker

Scott Corporation sold a fixed asset for more than its carrying amount and should report the transaction using the net concept, recognizing the total gain as part of continuing operations. The gain is calculated as proceeds minus carrying amount and does not qualify as part of discontinued operations. Incorrect options include reporting gains as part of revenues, in discontinued operations, or in other comprehensive income.

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6 views1 page

q1m1 Becker

Scott Corporation sold a fixed asset for more than its carrying amount and should report the transaction using the net concept, recognizing the total gain as part of continuing operations. The gain is calculated as proceeds minus carrying amount and does not qualify as part of discontinued operations. Incorrect options include reporting gains as part of revenues, in discontinued operations, or in other comprehensive income.

Uploaded by

Harshawardhan Gupta
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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26/01/2025, 15:36 MCQs | CPA

MCQ-00031

Scott Corporation sold a fixed asset used for operations for greater than its carrying
amount. Scott should report the transaction in the income statement using the:

A. Gross concept, showing the proceeds as part of revenues and the carrying
amount as part of expenses in the continuing operations section.

B. Net concept, showing the total gain as part of continuing operations, not net of
income taxes.

C. Net concept, showing the total gain as part of discontinued operations, net of
income taxes.

D. Net concept, showing the total amount as a component of other comprehensive


income, net of income taxes.

Explanation
SkillBuilder Video

Choice "B" is correct. The transaction resulted in a gain, which should be reported
using the net concept (i.e., proceeds less carrying amount). This gain resulted in the
recognition of an asset not in the ordinary course of business, but it did not qualify as
part of discontinued operations.

Choice "A" is incorrect. Gains (and losses) are reported using the net concept.

Choice "C" is incorrect. Gains and losses from fixed asset sales are reported using the
net concept, but are not included in discontinued operations because a fixed asset is
not considered a component of an entity. Discontinued operations are only reported for
the disposal of a component of an entity.

Choice "D" is incorrect. Gains and losses from fixed asset sales are reported using the
net concept, but are not included in other comprehensive income.

https://cpa.becker.com/module/F-01-01/V1.2/mcqs/session?context=homework&filter=0 1/1

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