Changes and Errors
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(Accounting for Accounting Changes and Errors) Listed below are various types of accounting changes and errors.
?_____ 1. Change in a plant asset's salvage value.
?_____ 2. Change due to overstatement of inventory.
?_____ 3. Change from sum-of-the-years'-digits to straight-line method of depreciation.
?_____ 4. Change from presenting unconsolidated to consolidated financial statements.
?_____ 5. Change from LIFO to FIFO inventory method.
?_____ 6. Change in the rate used to compute warranty costs.
?_____ 7. Change from an unacceptable accounting principle to an acceptable accounting principle.
?_____ 8. Change in a patent's amortization period.
?_____ 9. Change from completed-contract to percentage-of-completion method on construction contracts.
?_____ 10. Change from FIFO to average-cost inventory method.
Instructions
For each change or error, indicate how it would be accounted for using the following code letters:
1.Accounted for prospectively.
2.Accounted for retrospectively.
3.Neither of the above.
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Solution Summary
Changes and Errors are denoted.
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ANSWERS
?__1___ 1. Change in a plant asset's salvage value.
?__2__ 2. Change due to overstatement of inventory.
?__2___ 3. Change from ...
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