Exam 22: Accounting Changes and Error Analysis

Yee Construction Co.had followed the practice of expensing all materials assigned to a construction job without recognizing any residual inventory.On December 31, 2016, it was determined that residual inventory should be valued at ¥56,000.Of this amount, ¥23,000 arose during the current year.Based on this information, all of the following statements are true regarding the effect on the financial statements to be prepared at the end of 2016 except

The new IFRS on financial instruments will be subject to the proper accounting for changes in accounting policy.

A company changes from straight-line to an accelerated method of calculating depreciation, which will be similar to the method used for tax purposes.The entry to record this change should include a

Which of the following is not a retrospective-type accounting change?

A company changes from percentage-of-completion to cost-recovery, which is the method used for tax purposes.The entry to record this change should include a

Companies report changes in accounting estimates retrospectively.

Which type of accounting change should always be accounted for in current and future periods?

Companies account for a change in depreciation methods as a change in accounting policy.

Which of the following is not treated as a change in accounting policy?

Each of the following errors will overstate 2016 net income except

Which of the following disclosures is required for a change from sum-of-the-years-digits to straight-line?

Stone Company changed its method of pricing inventories from average cost to FIFO.What type of accounting change does this represent?

Companies record corrections of errors from prior periods as an adjustment to the beginning balance of retained earnings in the current period.