35. Management has recently purchased new equipment but is uncertain about its useful life. For the initial year, management estimated a useful life of 10 years. However, due to a major accident during the first year, management is now uncertain about the equipment's functionality and has revised its estimate to 5 years and included a description of their uncertainty and of this change in estimated useful life in financial statement disclosures. Which of the following is an accurate statement regarding this approach? A) Information contains error because management changed its estimates on the useful life of the equipment. B) Information contains error because the useful life of the equipment is uncertain. C) Information is free from error because management has provided enough disclosure regarding the uncertain estimate. D) Information is free from error because management made the correct decision in revising the estimated useful life of the equipment.

35. Management has recently purchased new equipment but is uncertain about its useful life. For the initial year, management estimated a useful life of 10 years. However, due to a major accident during the first year, management is now uncertain about the equipment's functionality and has revised its estimate to 5 years and included a description of their uncertainty and of this change in estimated useful life in financial statement disclosures. Which of the following is an accurate statement regarding this approach? A) Information contains error because management changed its estimates on the useful life of the equipment. B) Information contains error because the useful life of the equipment is uncertain. C) Information is free from error because management has provided enough disclosure regarding the uncertain estimate. D) Information is free from error because management made the correct decision in revising the estimated useful life of the equipment.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Ww.204.
(Error and Change in Estimate—Depreciation) Joy Cunningham Co. purchased a machine on January 1, 2015, for $550,000. At that time, it was estimated that the machine would have a 10-year life and no salvage value. On December 31, 2018, the firm’s accountant found that the entry for depreciation expense had been omitted in 2016. In addition, management has informed the accountant that the company plans to switch to straight-line depreciation, starting with the year 2018. At present, the company uses the sum-of-the-years’-digits method for depreciating equipment.InstructionsPrepare the general journal entries that should be made at December 31, 2018, to record these events. (Ignore tax effects.)
I'm doing this practice problem and I think I am doing it wrong? Could you please check my work?
X Oil Company just completed its first year of operations and is considering using either the SE method or the FC method. During the year, X drilled 3 wells, 1 of which was an unsuccessful exploratory well. Determine which of the following is correct regarding X Company’s first year financial statements. Group of answer choices A. The full cost method will show more assets and more net income for the first year. B. The full cost method will show more assets and less net income for the first year. C. The full cost method will show less assets and more net income for the first year. D. The full cost method will show less assets and less net income for the first year.
Hansaben
Please Correct answer with Explanation And Do not Give solution in image format
3A
34. Subject : - Accounting In 20X4, Fredup Inc. purchased a piece of equipment for $21,000. The equipment has a 7-year useful life and no residual value. The equipment was erroneously included as an expense in the year. The error was discovered in December 20X8. Required: Prepare the journal entry to record the adjustment in December 20X8. (Assume the company uses straight line depreciation, ignore taxes.)
Adjustment for Depreciation Cowley Company just completed its first year of operations. The December 31 equipment account has a balance of $20,000. There is no balance in the Accumulated Depreciation-Equipment account or in the Depreciation Expense account. The accountant estimates the yearly equipment depreciation to be $4,000. Prepare the required adjustment to record the yearly depreciation for equipment. Note: Use negative signs with answers, when appropriate. Balance Sheet Income Statement Stockholders Assets Liabilities Equity Revenues Expenses = Net Income 20,000 4,000 Check O Previous A Save Answers
Please provide answer in text (Without image)
Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
Quayle Company acquired machinery on January 1, 2005 which it depreciated under the straight-line method with an estimated life of fifteen years and no salvage value. On January 1, 2010, Quayle estimated that the remaining useful life of this machinery was six years with no salvage value. How should this change be accounted for by Quayle? As a prior period adjustment O As the cumulative effect of a change in accounting principle in 2010. O By setting future annual depreciation equal to one-sixth of the book value on January 1, 2010 O By continuing to depreciate the machinery over the original fifteen year life.