Bramble Corp., which began operations in January 2020, follows IFRS and is subject to a 30% income tax rate. In 2023, the followingevents took place:1.2.3.4.The company switched from the zero-profit method to the percentage-of-completion method of accounting for its long-termconstruction projects. This change was a result of experience with the project and improved ability to estimate the costs tocompletion and therefore the percentage complete.Due to a change in maintenance policy, the estimated useful life of Bramble's fleet of trucks was lengthened.It was discovered that a machine with an original cost of $240,000, residual value of $30,800, and useful life of 4 years wasexpensed in error on January 23, 2022, when it was acquired. This situation was discovered after preparing the 2023adjusting entries but before calculating income tax expense and closing the accounts. Bramble uses straight-line depreciationand takes a full year of depreciation in the year of acquisition. The asset's cost had been appropriately added to the CCA classin 2022 before the CCA was calculated and claimed.As a result of an inventory study early in 2023 after the accounts for 2022 had been closed, management decided that theweighted average cost formula would provide a more relevant presentation in the financial statements than the FIFO costformula. In making the change to weighted average cost, Bramble determined the following:Inventory-WeightedAverage Cost$73,500DateInventory-FIFO CostDec. 31, 2022$88,000Dec. 31, 2021123,00094,400Dec. 31, 2020182,000138,600 Bramble Corp., which began operations in January 2020, follows IFRS and is subject to a 30% income tax rate. In 2023, the followingevents took place:1.2.3.4.The company switched from the zero-profit method to the percentage-of-completion method of accounting for its long-termconstruction projects. This change was a result of experience with the project and improved ability to estimate the costs tocompletion and therefore the percentage complete.Due to a change in maintenance policy, the estimated useful life of Bramble's fleet of trucks was lengthened.It was discovered that a machine with an original cost of $240,000, residual value of $30,800, and useful life of 4 years wasexpensed in error on January 23, 2022, when it was acquired. This situation was discovered after preparing the 2023adjusting entries but before calculating income tax expense and closing the accounts. Bramble uses straight-line depreciationand takes a full year of depreciation in the year of acquisition. The asset's cost had been appropriately added to the CCA classin 2022 before the CCA was calculated and claimed.As a result of an inventory study early in 2023 after the accounts for 2022 had been closed, management decided that theweighted average cost formula would provide a more relevant presentation in the financial statements than the FIFO costformula. In making the change to weighted average cost, Bramble determined the following:Inventory-WeightedAverage Cost$73,500DateInventory-FIFO CostDec. 31, 2022$88,000Dec. 31, 2021123,00094,400Dec. 31, 2020182,000138,600

EventType of Accounting ChangeAccounted for1. Change to percentage of completion methodChange in…

Analyze each of the four 2023 events described above. For each event, identify the type of accounting change that has occurred, and indicate whether it should be accounted for with full retrospective application, partial retrospective application, or prospective application.

Analyze each of the four 2023 events described above. For each event, identify the type of accounting change that has occurred, and indicate whether it should be accounted for with full retrospective application, partial retrospective application, or prospective application.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter17: Advanced Issues In Revenue Recognition

Section: Chapter Questions

Problem 19RE

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