Choose the accounting change type and treatment for each of the following independent situations for ACME Incorporated's December 31, 2021 fiscal year end, assuming that the company reports under IFRS. Choices can be used more than once and only one choice is applicable to each situation. During 2021, a long-term bond with a carrying value of $3,600,000 was retired at a cost of $4,100,000. The company switched from average cost to FIFO inventory costing during the current year. In calculating the depreciation in 2018 for buildings, an error was made which overstated income in that year by $ 75,000. The error was discovered in 2020. ACME revised the expected service life on a truck, acquired in 2018, from 10 years to 6 years due to a change in usage. To match the practice in the industry and enhance comparability of financial information, management decided to switch from the completed-contract method to the percentage-of- completion method for long-term contracts. 1. 2. 3. 4. 5. 6. Change in Accounting Policy - Prospective Application Change in Accounting Policy - Retrospective Application Change in Accounting Estimate - Prospective Application Change in Accounting Estimate - Retrospective Application Error Correction - Prospective Application Error Correction - Retrospective Application 7. None of the above
Choose the accounting change type and treatment for each of the following independent situations for ACME Incorporated's December 31, 2021 fiscal year end, assuming that the company reports under IFRS. Choices can be used more than once and only one choice is applicable to each situation. During 2021, a long-term bond with a carrying value of $3,600,000 was retired at a cost of $4,100,000. The company switched from average cost to FIFO inventory costing during the current year. In calculating the depreciation in 2018 for buildings, an error was made which overstated income in that year by $ 75,000. The error was discovered in 2020. ACME revised the expected service life on a truck, acquired in 2018, from 10 years to 6 years due to a change in usage. To match the practice in the industry and enhance comparability of financial information, management decided to switch from the completed-contract method to the percentage-of- completion method for long-term contracts. 1. 2. 3. 4. 5. 6. Change in Accounting Policy - Prospective Application Change in Accounting Policy - Retrospective Application Change in Accounting Estimate - Prospective Application Change in Accounting Estimate - Retrospective Application Error Correction - Prospective Application Error Correction - Retrospective Application 7. None of the above
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Choose the accounting change type and treatment for each of the following
independent situations for
ACME Incorporated's December 31, 2021 fiscal year end, assuming that the
company reports under IFRS. Choices can be used more than once and only one
choice is applicable to each situation.
During 2021, a long-term
bond with a carrying value
of $3,600,000 was retired
at a cost of $4,100,000.
The company switched
from average cost to FIFO
inventory costing during
the current year.
In calculating the
depreciation in 2018 for
buildings, an error was
made which overstated
income in that year by $
75,000. The error was
discovered in 2020.
ACME revised the expected
service life on a truck,
acquired in 2018, from 10
years to 6 years due to a
change in usage.
To match the practice in the
industry and enhance
comparability of financial
information, management
decided to switch from the
completed-contract method
to the percentage-of-
completion method for
long-term contracts.
1.
2.
3.
4.
5.
6.
Change in Accounting Policy -
Prospective Application
Change in Accounting Policy -
Retrospective Application
Change in Accounting Estimate -
Prospective Application
Change in Accounting Estimate -
Retrospective Application
Error Correction - Prospective
Application
Error Correction - Retrospective
Application
7. None of the above
Transcribed Image Text:Choose from the following options:
1. Change in Accounting Policy - Prospective Application
2.
3.
4.
5.
6.
7.
Change in Accounting Policy - Retrospective Application
Change in Accounting Estimate - Prospective Application
Change in Accounting Estimate - Retrospective Application
Error Correction - Prospective Application
Error Correction - Retrospective Application
None of the above
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