When Looking at the Statement of Comprehensive Income in the 2009

Multiple Choice

When looking at the statement of comprehensive income in the 2009 annual reports of four similar companies in the same industry, you find the following: Which company has an expense item that is likely to be persistent in terms of earnings?

A) Company 1
B) Company 2
C) Company 3
D) Company 4
Solution C, because items that are expected to be persistent in terms of earning are those transactions like research and development costs, that are expected to be repeated in future years during the normal operation of the business. The other items, like a charge for disposal of a business segment, a provision for restructuring, and litigation charges, are all items that are not expected to occur again in future years.