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Question 12
A manufacturer of household appliances may incur a loss due to
the discovery of a defect in one of its products. The occurrence of
the loss is reasonably possible and the resulting costs can be
reasonably estimated. This possible loss should be
Question 13
A hedge to offset the risk of loss on a recognized asset or liability
is which of the following types of hedge?
Question 14
Envoy Co. manufactures and sells household products. Envoy
experienced losses associated with its small appliance group.
Operations and cash flows for this group can be clearly
distinguished from the rest of Envoy's operations. Envoy plans to
sell the small appliance group with its operations. What is the
earliest point at which Envoy should report the small appliance
group as a discontinued operation?
Question 15
An extraordinary gain should be reported as a direct increase to
which of the following?
Question 16
Poe Co. had 300,000 shares of common stock issued and
outstanding at December 31, 2004. No common stock was issued
during 2005 .On January 1, 2005, Poe issued 200,000 shares of
nonconvertible preferred stock. During 2005, Poe declared and
paid $75,000 cash dividends on the common stock and $60,000 on
the preferred stock. Net income for the year ended December 31,