Exam 21: Accounting Changes and Error Analysis

MissTake Corp.is a small private corporation that does not prepare comparative statements.At the end of their 2017 fiscal year, it was discovered that the 2016 depreciation expense on their computer equipment had been incorrectly debited to maintenance expense.How should MissTake deal with this situation?

Use the following information for questions. On January 2, 2015, Beaver Corp.purchased machinery for $135,000.The entire cost was incorrectly recorded as an expense.The machinery has a nine-year life and a $9,000 residual value.Beaver uses straight-line depreciation for all its plant assets.The error was not discovered until May 1, 2017, and the appropriate corrections were made.Ignore income tax considerations. -Beaver's income statement for the year ended December 31, 2017 should show the cumulative effect of this error of

Caspar Corp.began operations on January 1, 2016, and uses FIFO to cost its inventory.Management is contemplating a change to the average cost method and is interested in determining what effect such a change will have on pre-tax income.Accordingly, the following information has been developed: Based upon the above information, a change to the average cost method in 2017 would result in pre-tax income for 2017 of

Accounting for a retrospective change requires