Which of the Following Should Be Disclosed in the Summary of Significant Accounting Policies?

Here’s your college CPA Exam question for the day. Which of the following should be disclosed in the Summary of Significant Accounting Policies?

A. Rent Expense Amount.

B. Maturity dates of Long Term Debt.

C. Methods of Amortizing Intangibles.

D. Composition of Plant Assets.

The Answer is C. Methods of Amortizing Intangibles.

The reasoning here for the correct answer is that ASC Topic 235 recommends that when financial statements are issued, a statement identifying the accounting policies adopted and followed by the reporting entity should be presented as an integral part of the financial statements. The accounting policies are the specific accounting principles and methods themselves of applying the principles that have been adopted for preparing the financial statements.

In essence, the amortizing intangibles method is the only one on this list that even comes close to an accounting policy disclosure.

Follow and subscribe for more CPA Exam question explanations, this one was for the FAR CPA exam section.

Sources:

https://www.bankrate.com/banking/cds/cd-rates/

https://money.cnn.com/data/markets/

https://www.trainingconsultants.com/

https://www.trainingconsultants.com/series-7-exam.aspx

https://www.trainingconsultants.com/series-65-exam.aspx

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