Intermediate Accounting, Student Value Edition (2nd Edition)
2nd Edition
ISBN: 9780134732145
Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Publisher: PEARSON
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Chapter 21, Problem 1SSC
Surfing the Standards: Change in Accounting Principle
- 1. Read FASB ASC 250-10-S99 to respond to the following question. ASCO Recordings has decided to change its inventory system from the LIFO method to the FIFO method for the 2015 fiscal year. Because it does not carry much inventory, the change in principle does not have a material effect on the financial statements of prior periods. Accordingly, it plans not to adjust comparative financial statements presented but rather to report the cumulative effect of the change through
retained earnings as of the beginning of the 2015 fiscal year. Is this approach permissible? If not, how must ASCO Recordings report this change in principle? - 2. Read FASB ASC 250-10-45 to respond to the following question Basty Needleworks, a calendar-year firm, has decided to change its inventory system from the FIFO method to the LIFO method. It made this decision in July 2015, and thus plans to report under LIFO for the first time in its third quarter of 2015 filings. Based on the impracticability rules associated with retrospective application, it plans to use the prospective method of reporting for the change in principle beginning in the third quarter. Is this approach permissible? If not, how must Basty report this change in principle?
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Duncan Company miscounted its ending inventory during the December 31, 2025 physical count. Which items will be wrong on the 2025 financial statements assuming this mistake is not discovered until the next year? (Choose all that apply).
A. Noncurrent assets
B. Net income
C. Inventory
D. Liabilities
E. Cost of goods sold
H
Chapter 21 Solutions
Intermediate Accounting, Student Value Edition (2nd Edition)
Ch. 21 - Are accounting changes permitted in financial...Ch. 21 - How do firms report accounting changes under the...Ch. 21 - Prob. 21.3QCh. 21 - How do firms account for changes in accounting...Ch. 21 - Prob. 21.5QCh. 21 - Prob. 21.6QCh. 21 - Prob. 21.7QCh. 21 - Prob. 21.8QCh. 21 - Do accounting errors that self-correct within two...Ch. 21 - Does a firm need to correct an error that...
Ch. 21 - Prob. 21.1MCCh. 21 - Prob. 21.2MCCh. 21 - Prob. 21.3MCCh. 21 - Prob. 21.4MCCh. 21 - Prob. 21.5MCCh. 21 - Prob. 21.1BECh. 21 - Prob. 21.2BECh. 21 - Prob. 21.3BECh. 21 - Prob. 21.4BECh. 21 - Change in Accounting Principle, Long-Term...Ch. 21 - Prob. 21.6BECh. 21 - Prob. 21.7BECh. 21 - Prob. 21.8BECh. 21 - Prob. 21.9BECh. 21 - Prob. 21.10BECh. 21 - Prob. 21.11BECh. 21 - Prob. 21.12BECh. 21 - Prob. 21.13BECh. 21 - Prob. 21.14BECh. 21 - Change in Accounting Principle, Inventory. Massi...Ch. 21 - Change in Accounting Principle, Long-Term...Ch. 21 - Prob. 21.3ECh. 21 - Change in Accounting Principle, Inventory. Winthur...Ch. 21 - Prob. 21.5ECh. 21 - Prob. 21.6ECh. 21 - Error Analysis and Correction. Feinstein and...Ch. 21 - Prob. 21.8ECh. 21 - Prob. 21.9ECh. 21 - Prob. 21.10ECh. 21 - Change in Accounting Principle, Inventory. Second...Ch. 21 - Prob. 21.2PCh. 21 - Prob. 21.3PCh. 21 - Prob. 21.4PCh. 21 - Prob. 21.5PCh. 21 - Change in Estimate, Inventory, Bad Debt Expense....Ch. 21 - Prob. 21.7PCh. 21 - Cases Judgment Case Judgment Case: Materiality and...Ch. 21 - Prob. 1FSCCh. 21 - Surfing the Standards: Change in Accounting...Ch. 21 - Prob. 1BCC
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