Reference no: EM132478751

Question 1: Under the accounting standards a company is required to report in the income statement as an item if there is either a material income or expense items. Which of the following would NOT require disclosure within the income statement as it is not a material income or expense?

Select one:

Option a. RedFace Ltd settled litigation with a customer who claimed the chili dish was not spicy enough of $45,000.

Option b. QuickFlights Ltd paid their CEO a salary of $22 million for the year despite having a loss for the year, for the first time in 30 years. Correct! The CEO's salary is not considered a material expense, check the bullet point on the top of page 495, section 13.4 for what are material expenses and income.

Option c. ZZZ Party Supplies Ltd had to write-off 2 motor vehicles worth a total of $50,000 due to a road accident involving fireworks exploding the the back seat of the vehicles.

Option d. Winery Ltd experienced a write-down of inventory, their 2010 Pinot Noir was worth $40 per bottle and is now worth $2 per bottle.

Option e. Tanner Ltd sold off its Hong Kong Division to Palace Ltd for $45 million.