Vice President: Oh well, it doesn't make any difference because the net effect of all of these items is immaterial, so no disclosure is necessary. Vice President: What about the walkout we had last month when employees were upset about their commission income? Would this situation not also be subject to reporting outside operating income? Controller: I am not sure whether this item should get special reporting or not. If a sale of this type is considered unusual and infrequent, it must be reported separate from income from continuing operations. President: Professional pronouncements would require that we report this information separately in the income statement. I believe that we should simply report the gain on the sale as other income or expense without detail. Separate categories tend to be absurd and confusing to the stockholders. Vice President: If we sell the Casino Knights Division, it seems ridiculous to segregate the results of the sale in the income statement. As auditor for Simpson Corp., you have recently overheard the following discussion between the controller and financial vice president.
is an entertainment firm that derives approximately 30% of its income from the Casino Knights Division, which manages gambling facilities.
