The occurrence which most likely would have no effect on 2014 net income (assuming that all amounts involved are material) is the
A) sale in 2014 of an office building contributed by a stockholder in 1983.
B) collection in 2014 of a receivable from a customer whose account was written off in 2013 by a charge to the allowance account.
C) settlement based on litigation in 2014 of previously unrecognized damages from a serious accident that occurred in 2012.
D) worthlessness determined in 2014 of stock purchased on a speculative basis in 2010.

Question

Quizplus · Accepted Answer

Since the receivable was already written off in 2013, its collection in 2014 would simply result in a recovery of a previously recognized expense and would have no effect on net income. The sale of the office building, settlement from litigation, and worthlessness of stock would all have an impact on net income.

The Occurrence Which Most Likely Would Have No Effect on 2014