In 1975, Riveria Company had acquired copyrights for $750,000 on several literar
ID: 2609607 • Letter: I
Question
In 1975, Riveria Company had acquired copyrights for $750,000 on several literary works from some obscure 18th century authors. These copyrights were fully amortized by 2015. In early 2015, a new anthropological discovery made these copyrights worth $2,500,000. As a result, Riveria should report which of the following in its financial statements for 2015?
$2,500,000 as an extraordinary item
Cannot be recognized under U.S. GAAP in the financial statements
$2,500,000 as a holding gain
$750,000 as copyrights-based recovery of value limited to historical cost
Explanation / Answer
It was an extraordinary item since it was unusual or infrequent item. Copyright was fully amortized by 2015 and an unusual discovery was made as an increase in Copyright value extraordinarily.
It is reported as extraordinary .