Exam 22: Accounting Corrections and Error Analysis

What disclosures must a lessor include on its financial statements for all leases to which it has entered?

Which of the following is not a required disclosure item for the statement of cash flows? A)interest and dividends paid when the indirect method is used B)reconciliation of net income to total net cash flows C)all significant noncash investing and financing activities D)policy regarding cash equivalents

Refer to Stillwater Sports: Required: 1.Prepare appropriate journal entries for Stillwater Sports for the first year. 2.Show how the lease-related information will be presented on Stillwater's balance sheet for the first year.

For a direct-finance capital lease,the lease receivable is the present value of the minimum lease payments plus an element of gross profit.

In reconciling information to complete its financial statements,Biltmore,Inc.discovered the following situations: Required: Assuming that no depreciation had been recorded,recompute depreciation expense,warranty expense change,net income before taxes,income tax expense,and net income.

A lessee's option to purchase a leased asset at a price that is substantially lower than the asset's fair value is referred to as a ________.

Even if the firm uses the indirect method,it must disclose the total amounts of income taxes paid during the period.

Changes in current assets relate to operating activities.

Which of the following is a disclosure that a lessor must make within its financial statements?

How is a guaranteed residual value accounted for when computing minimum lease payments?

Disclosures about non-cash financing and investing activities must be presented in a summary schedule below the statement of cash flows.

Langley Corporation replaced an HVAC system for one of its warehouses in July,2015,at a cost of $350,000.The accountant recording the purchase charged it to repairs and maintenance expense.The error was discovered early in 2017 while reconciling depreciation expense for 2016.The system should last about 7 years with no salvage value.What entry should be made before the 2016 books are closed if the company uses straight-line depreciation?

Tarleton Company discovered ending inventory errors in 2015 and 2016.The 2015 ending inventory was overstated by $205,000 whereas the 2016 ending inventory was understated by $75,000.Ignoring income tax effects,by what amount should the beginning retained earnings be adjusted on January 1,2017? A)$75,000 debit B)$75,000 credit C)$130,000 debit D)$205,000 credit

Bank overdrafts are considered to be a reduction of cash under IFRS,but not under U.S.GAAP.

For the Years Ended December 31 *Restated

The first balance sheet presented under the new method is December 31,2014.The cumulative effect after tax in retained earnings is computed as follows: The cumulative effect of the change is $15,000 plus $12,000 equals $27,000.

List and briefly describe the various sections of the statement of cash flows.

Determine the after-tax cumulative effect in retained earnings at January 1,2016.

Determine the required disclosures for this series of errors.

When a firm has a change in reporting entity,it must disclose ________. A)the individual financial statements for each component entity B)the effect of the change on net income and EPS for each year presented C)the reasons that the company chose to purchase a new business unit D)the reasons for the lack of comparability to prior financial statements