A review of the December 31, 2006, financial statements of a corporation revealed that under the caption "Exceptional and infrequent losses," a total of $130,000 was reported. Further analysis revealed that the $130,000 in losses was comprised of the following items:
(1) A loss of $25,000 incurred in the abandonment of equipment formerly used in the business.
(2) An unusual and infrequent occurrence, a loss of $37,500 was sustained as a result of damage to a warehouse by a falling meteorite.
(3) During 2006, several factories were shut down during a major strike by employees. Shutdown expenses totalled $60,000.
(4) Uncollectible accounts receivable of $7,500 were written off as uncollectible.
(5) Foreign exchange - translation gains: $10,000
(6) Decline in market value of Available-for-sale securities: $15,000
Ignoring income taxes, what amount would be shown as Other Comprehensive Income (Loss) on the statement of Comprehensive Income?
A) ($5,000)
B) $10,000
C) $15,000
D) $130,000

Question

A review of the December 31, 2006, financial statements of a corporation revealed that under the caption "Exceptional and infrequent losses," a total of $130,000 was reported. Further analysis revealed that the $130,000 in losses was comprised of the following items: 
(1) A loss of $25,000 incurred in the abandonment of equipment formerly used in the business.
(2) An unusual and infrequent occurrence, a loss of $37,500 was sustained as a result of damage to a warehouse by a falling meteorite.
(3) During 2006, several factories were shut down during a major strike by employees. Shutdown expenses totalled $60,000.
(4) Uncollectible accounts receivable of $7,500 were written off as uncollectible.
(5) Foreign exchange - translation gains: $10,000
(6) Decline in market value of Available-for-sale securities: $15,000
Ignoring income taxes, what amount would be shown as Other Comprehensive Income (Loss) on the statement of Comprehensive Income?
A) ($5,000)
B) $10,000
C) $15,000
D) $130,000

Quizplus · Accepted Answer

The loss on abandonment of equipment and the loss from damage to the warehouse by a meteorite are both considered to be infrequent and unusual events. Therefore, they would be reported as Other Comprehensive Income (Loss) on the statement of Comprehensive Income. The other items are not considered to be infrequent or unusual events, so they would not be reported as Other Comprehensive Income (Loss).

A Review of the December 31, 2006, Financial Statements of a Corporation