Under new accounting standards passed in 2006 firms

11. Under new accounting standards passed in 2006 firms must report changes in accounting
principle in the current and prior years as if the new accounting principle had been applied all
along. The rationale for this change was

12. During July 2013 Ralston Company decides to dispose of one of its subsidiaries which qualifies
for accounting as a discontinued operation. At the July2013 measurement date Ralston
Company estimates that it will report net income of $300,0000 dollars from the measurement
date until the disposal date which is expected to be in April 2014 In addition, Ralston estimates
that it will lose 100,000 on the sale of the segment. How much gain or loss on discontinued
operations will Ralston report in its 2012 income statement (net of income taxes)?
13. During July 2012 Ralston Company decides to dispose of one of its subsidiaries which qualifies
for accounting as a discontinued operation. At the July 2012 measurement date Ralston
Company estimates that it will report net losses of $1,500,000 dollars from the measurement
date until the disposal date which is expected to be in April 2013. In addition, Ralston estimates
that it will lose $300,000 on the sale of the segment. How much gain or loss on discontinued
operations will Ralston report in its 2012 income statement (net of income taxes)?
14. Which of the following does not describe an extraordinary gain or loss?
15. Which of the following items is consistent with earnings not being informative about current
performance but are informative about future earnings?
16. Which of the following items is consistent with earnings being informative about current
performance but not informative about future earnings?
17. Which of the following items is consistent with earnings being informative about current
performance and informing the analyst that level of current earnings is sustainable?