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AICPA Exam CPA-Financial Topic 1 Question 108 Discussion
Topic #: 1
Which of the following factors determines whether an identified segment of an enterprise should be reported in the enterprise's financial statements under SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information?
1. The segment's assets constitute more than 10% of the combined assets of all operating segments.
2. The segment's liabilities constitute more than 10% of the combined liabilities of all operating segments.
Choice 'B' is correct. If comparative FS are issued, restate prior year's FS. If comparative FS are not issued, restate prior year-end's retained earnings account by 'adjusting' (net of tax) the opening balance of the current retained earnings statement. Note that when an error is corrected, retroactive restatement is used, and when there is a change in accounting principle, retrospective restatement is done. However, this is only a difference in terminology.
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