Worked-example setupScope and assumptions
- Granite Harbor is fictional; stated carrying amounts, disposal status, materiality, and operating history are supplied for presentation practice.
- Tax amounts, insurance recovery, held-for-sale measurement, and disclosure completeness are outside this example.
- Period
- Year ended December 31
- Units
- USD
- Rounding
- Whole USD thousands; no rounding required
Problem
Granite Harbor sells an unused warehouse for $9,200; its supported carrying amount is $7,600. The company sells one or two properties in most years, but property sales are not an output of its customer contracts. A severe storm also destroys $900 of inventory in a region where similar storms have occurred twice in five years. Finally, the board approves and completes the sale of the entire marine-instrument business, one of the company's three major product lines.
Separate conclusions
| Event | Measurement | Activity and presentation | Evidence conclusion |
|---|---|---|---|
| Warehouse sale | $1,600 gain | Net gain in continuing operations under the supplied facts | Peripheral to customer revenue, but recurring history matters to a forecast |
| Storm loss | $900 supplied loss | Continuing operations | Local recurrence evidence does not support calling it infrequent; ordinary-activity evidence is still needed for unusual nature |
| Marine-instrument sale | Amounts outside this example | Separate discontinued-operation analysis | A complete major line is evidence of a strategic shift with a major effect; component and disposal facts are supplied |
The warehouse gain is $9,200 less $7,600, or $1,600. Reporting the proceeds as revenue would overstate the scale of customer activity. Calling the gain nonrecurring would also contradict the stated disposal history.
The storm does not qualify for an old extraordinary category. It remains within continuing operations. The local recurrence evidence weighs against an infrequency conclusion, and the entity's activities and environment must be reviewed before calling the event unusual.
The product-line sale is different. It disposes of a complete major line and is therefore consistent with the examples of a strategic shift in ASC 205-20-45-1C. The example supplies the component and completed-disposal facts. A real file would still document the criteria, major effect, period results, tax effects, comparatives, continuing involvement, cash flows, and notes.
Verified calculation · scoped sums
The curriculum loader recomputed this example before it entered the site build. Expand any structured input to inspect the stated facts.
- amounts
- 2 fields
Inspect data
{
"warehouse_carrying_amount": -7600,
"warehouse_proceeds": 9200
}- totals
- 1 field
Inspect data
{
"warehouse_gain": [
"warehouse_proceeds",
"warehouse_carrying_amount"
]
}Recomputed result
| Measure | Value |
|---|---|
| warehouse gain | 1,600 |