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Reporting
Extraordinary Gains and Losses
Prior to APB Opinion No. 9 ...[Several years ago [1962] General Motors Corporation and Standard Oil Company (New Jersey) each sold their 50% holding in Ethyl Corporation at a gain of about $75 million. General Motors accounted for the gain as part of income while Standard Oil credited the gain directly to net worth (Retained earnings.) Each chairman of the board was called on at their respective stockholders’ meetings to explain their accounting for the gain. Each chairman attempted to justify his respective treatment in terms of being “consistent with company policy” or that it would give a “more realistic income picture” etc. “Discussion of Toward an Empirical Measure of Materiality” Robert K. Jaedicke Journal of Accounting Research, Vol. 8, Empirical Research in Accounting: Selected Studies 1970 (1970), pp. 149-153 |