INTERMEDIATE ACCOUNTING
8th Edition
ISBN: 9780078025839
Author: J. David Spiceland
Publisher: McGraw-Hill Education
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Chapter 20, Problem 20.14Q
If it is discovered that an extraordinary repair in the previous year was incorrectly debited to repair expense, how will
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If the statement of financial position error is discovered in the year of error, what action is to be done by the entity?
Ignore the
Reclassify the item to its proper real account.
Adjust the effect to the retained earnings account.
Reclassify the item to nominal account.
If the income statement error is discovered in a subsequent accounting period, what action is to be done by the entity?
Group of answer choices
a. Reclassify the item to its proper nominal account and restate the income statement of the prior year affected by the error.
b. Restate the income statement of the prior year affected by the error.
c. No reclassifying entry is necessary but restate the income statement of the prior year affected by the error.
d. Reclassify the item to its proper nominal account.
Recording of next year's sales as sales of the current year will
Group of answer choices
a. overstate net income of next year
b. not affect retained earnings at the end of next year
c. understate retained earnings at the end of the current year
d. understate net income of the current year
Using IFRS, how should prior period errors that are discovered in a subsequent reporting period be recognized in the financial statements? a. As an adjustment to beginning retained earnings for the reporting period in which the error was discovered. b. As a note in the financial statements that the error was previously made but has since been corrected. c. In the current period if it’s not considered practicable to report it retrospectively. d. In the statement of comprehensive income.
Chapter 20 Solutions
INTERMEDIATE ACCOUNTING
Ch. 20 - Prob. 20.1QCh. 20 - Prob. 20.2QCh. 20 - Prob. 20.3QCh. 20 - Lynch Corporation changes from the...Ch. 20 - Prob. 20.5QCh. 20 - Most changes in accounting principles are recorded...Ch. 20 - Prob. 20.7QCh. 20 - Prob. 20.8QCh. 20 - Its not easy sometimes to distinguish between a...Ch. 20 - For financial reporting, a reporting entity can be...
Ch. 20 - Prob. 20.11QCh. 20 - Describe the process of correcting an error when...Ch. 20 - Prob. 20.13QCh. 20 - If it is discovered that an extraordinary repair...Ch. 20 - Prob. 20.15QCh. 20 - Prob. 20.16QCh. 20 - Prob. 20.17QCh. 20 - BE 20–1
Change in inventory methods
LO20–2
In...Ch. 20 - Prob. 20.2BECh. 20 - Prob. 20.3BECh. 20 - Prob. 20.4BECh. 20 - Prob. 20.5BECh. 20 - Prob. 20.6BECh. 20 - Prob. 20.7BECh. 20 - Prob. 20.8BECh. 20 - Prob. 20.9BECh. 20 - Prob. 20.10BECh. 20 - Prob. 20.11BECh. 20 - Prob. 20.12BECh. 20 - Prob. 20.1ECh. 20 - Prob. 20.2ECh. 20 - Prob. 20.3ECh. 20 - Prob. 20.4ECh. 20 - Prob. 20.5ECh. 20 - FASB codification research LO202 Access the FASB...Ch. 20 - Prob. 20.7ECh. 20 - Prob. 20.8ECh. 20 - Prob. 20.9ECh. 20 - Prob. 20.10ECh. 20 - Prob. 20.11ECh. 20 - Prob. 20.12ECh. 20 - Prob. 20.13ECh. 20 - Prob. 20.14ECh. 20 - Prob. 20.15ECh. 20 - Prob. 20.16ECh. 20 - Prob. 20.17ECh. 20 - Classifying accounting changes LO201 through...Ch. 20 - Prob. 20.19ECh. 20 - Prob. 20.20ECh. 20 - Prob. 20.21ECh. 20 - Prob. 20.22ECh. 20 - Prob. 20.23ECh. 20 - Prob. 20.24ECh. 20 - Classifying accounting changes and errors LO201...Ch. 20 - Prob. 1CPACh. 20 - Prob. 2CPACh. 20 - Prob. 3CPACh. 20 - Prob. 4CPACh. 20 - Prob. 5CPACh. 20 - Prob. 6CPACh. 20 - Prob. 7CPACh. 20 - Prob. 8CPACh. 20 - Prob. 9CPACh. 20 - Prob. 10CPACh. 20 - Prob. 11CPACh. 20 - Prob. 12CPACh. 20 - Prob. 13CPACh. 20 - Prob. 14CPACh. 20 - Prob. 15CPACh. 20 - Prob. 1CMACh. 20 - Prob. 2CMACh. 20 - Prob. 3CMACh. 20 - Prob. 20.1PCh. 20 - Prob. 20.2PCh. 20 - Prob. 20.3PCh. 20 - Prob. 20.4PCh. 20 - Prob. 20.5PCh. 20 - Prob. 20.6PCh. 20 - Prob. 20.7PCh. 20 - Prob. 20.8PCh. 20 - Prob. 20.9PCh. 20 - Prob. 20.10PCh. 20 - Prob. 20.11PCh. 20 - Prob. 20.12PCh. 20 - Prob. 20.13PCh. 20 - Prob. 20.14PCh. 20 - Prob. 20.15PCh. 20 - Prob. 20.16PCh. 20 - Prob. 20.17PCh. 20 - Prob. 20.1BYPCh. 20 - Prob. 20.2BYPCh. 20 - Prob. 20.3BYPCh. 20 - Prob. 20.4BYPCh. 20 - Prob. 20.5BYPCh. 20 - Prob. 20.6BYPCh. 20 - Analytic Case 20–8
Various changes
LO20–1 through...Ch. 20 - Prob. 20.9BYPCh. 20 - Prob. 20.10BYPCh. 20 - Prob. 20.11BYPCh. 20 - Prob. 20.12BYP
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- If the statement of financial position error is discovered in a subsequent accounting period, what action is to be done by the entity? A. Reclassify the item to its proper real account but do not restate the statement of financial position of the prior year affected by the error. B. Reclassify the item to its proper real account. C. Restate the statement of financial position of the prior year affected by the error. D. Reclassify the item to its proper real account and restate the statement of financial position of the prior year affected by the errorarrow_forward1.Provide an argument explaining why expenses that were inadvertently omitted in a previous year should be debited directly to retained earnings in the following period in which the error is discovered, rather than recognising them in the profit or loss in the period when the error was discovered.arrow_forwardIf the income statement error is discovered in the year of error, what action is to be done by the entity? a. Reclassify the item to its proper nominal account. b. Reclassify the item to real account. c. Adjust the effect to the retained earnings account. d. Ignore the error.arrow_forward
- Where financial statements for a single year are being presented, a prior period error recognized in the current year ordinarily would a. Affect net income of the current year. b. Be shown as an adjustment of the affected component of equity at the start of the current year. c. Be included in the statement of recognized gains and losses. d. Be shown as an extraordinary item on the current year's financial statement of comprehensive income.arrow_forwardA company fails to record accrued wages for the current year. Which of the following statement is true? O Retained earnings for the current year is overstated. O Net income for the current year is correct. O Retained earnings for the current year is understated. O Net income for the current year is understated.arrow_forwardAn example of an item that should be reported as a prior-period adjustment in a company’s annual financial statements is a. a settlement resulting from litigation. b. an adjustment of income taxes. c. a correction of an error that occurred in a prior period. d. an adjustment of utility revenue because of rate revisions ordered by a regulatory commission.arrow_forward
- If a company incorrectly classified an item of capital expenditure as revenue expenditure, what effect would this have on the company's accounts in the year of the expenditure and in subsequent years?arrow_forwardIf it is impracticable to determine the cumulative effect of an accounting change to any of the prior periods, the accounting change should be accounted for a. as a cumulative effect change on the income statement b. as a prior period adjustment c. on a prospective basis d. as an adjustment to retained earningsarrow_forwardAccording to IAS 8, how should prior period errors that are discovered in a subsequent reporting period be recognized in the financial statements? a. As an adjustment to beginning retained earnings for the reporting period in which the error was discovered. b. As a note in the financial statements that the error was previously made but has since been corrected. c. In the statement of comprehensive income. d. Retroactively for all periods presented.arrow_forward
- What is the effect of omission of accrued income in retained earnings at the end of year 2? a. Understated b. No effect c. Overstated d. Cannot be determined from the given informationarrow_forward12arrow_forwardWhere a change in accounting estimates occurs, which of the following should be disclosed? A. The nature of the change and the impact on previous income statements The fact that the amount of the effect on future periods will not be disclosed because B. estimating that amount is impracticable and the reason for the change and comparative data to show the impact with and without the change The fact that the amount of the effect on future C. periods will not be disclosed because estimating that amount is impracticable D. The reason for the change and comparative data to show the effect with and without the changearrow_forward
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