Betsy Kirkland, Inc. incurred a flood loss during the first quarter of 2021 that is deemed both unusual and not expected to recur again in the near future. The loss is considered immaterial to the twelve-month period, but is material in amount relative to the first quarter. The proper accounting treatment in the first quarter interim statement is to:
A) Ignore the loss.
B) Record the loss in the first quarter as an unusual loss, net of income taxes.
C) Record one-fourth of the loss in the first quarter as an unusual loss, net of income taxes.
D) Ignore the loss in the first quarter, and record it in the annual statement only.
E) Record the loss in the first quarter, but not as an unusual loss, and disclose the loss in a separate note or in the income statement as a separate line item.

Question

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The Answer of Betsy Kirkland, Inc. incurred a flood loss during the first quarter of 2021 that is deemed both unusual and not expected to recur again in the near future. The loss is considered immaterial to the twelve-month period, but is material in amount relative to the first quarter. The proper accounting treatment in the first quarter interim statement is to:
A) Ignore the loss.
B) Record the loss in the first quarter as an unusual loss, net of income taxes.
C) Record one-fourth of the loss in the first quarter as an unusual loss, net of income taxes.
D) Ignore the loss in the first quarter, and record it in the annual statement only.
E) Record the loss in the first quarter, but not as an unusual loss, and disclose the loss in a separate note or in the income statement as a separate line item.