Dott Corporation experienced a $100,000 extraordinary loss in the second quarter of 2011 in their East Coast operating segment.The loss should be recognized
A)only at the consolidated report level at the end of the year.
B)entirely in the second quarter of 2011 in the East Coast operating segment.
C)in equal amounts allocated to the remaining three quarters of 2011 at the corporate level.
D)in equal amounts allocated to the remaining three quarters of 2011 of the East Coast segment.

Question

Quizplus · Accepted Answer

An extraordinary loss should be recognized in the period in which it occurs and should be recorded separately. Therefore, the entire $100,000 extraordinary loss should be recognized in the second quarter of 2011 in the East Coast operating segment. Option A is incorrect because the loss should not wait until the end of the year to be recognized. Option C and D are incorrect because allocating the loss to other periods or segments would not accurately reflect the impact of the loss.

Dott Corporation Experienced a $100,000 Extraordinary Loss in the Second