Exam 22: Accounting Corrections and Error Analysis

Which of the following is not a cash inflow from investing activities?

Reconstruct the table with corrected amounts.

Prepare the comparative income statements for Machino,Inc.after the change to FIFO.

Refer to Superbyte Corporation. Record the journal entries that SuperByte will make at the inception of the lease and on July 1.

If a company has recorded a liability for a lawsuit,and the amount of the settlement is more than the provision in the liability,it must consider this an error and retrospectively correct it.

Reconstruct the table with corrected amounts.

Reconstruct the table with corrected amounts.

Refer to Rocket Corporation. Required: 1.Determine the present value of the lease at its inception. 2.Determine the amounts related to the lease that Rocket would report in its balance sheet and income statement at December 31 of the current year. 3.Make the appropriate journal entries to record the lease and the related transactions from the inception of the lease through December 31 on Rocket's books.

For which one of the following changes is it appropriate to use the prospective method?

Accounting changes detract from which one of the following enhancing qualitative characteristics of accounting?

Under the direct method,bad debt expense is ignored because it is a non-cash expense.

StatMed Corporation leases medical equipment under a five year lease.The terms of the lease call for five equal payments of $25,000,with the first payment due at the inception.The interest rate implicit in the lease is 13%.The first year's interest expense will be ________.

Refer to Stillwater Sports: Required:

A financial statement can provide a faithful representation even if it is not perfectly accurate as long as the process is selected and applied with no errors and the description of the transaction is free from error.

In determining net cash flow from operating activities,an increase in merchandise inventory during a period ________. A)requires a subtraction adjustment to financing cash flows under the indirect method B)requires a subtraction adjustment to sales to customers under the direct method C)requires an addition adjustment to net income under the indirect method D)requires an addition adjustment to payments to suppliers under the direct method

Accounting principle changes are generally handled retrospectively.

How does a sales-type lease differ from a direct financing lease?

On the books of a lessee,a lease may be classified as either ________.

Jenkins,Inc.builds custom machines for manufacturers using robotic equipment.In 2016,the company decided to change from straight-line to double-declining-balance depreciation for its robotic equipment.It changed the life expectancy as follows: Determine the correct amount of depreciation to expense for 2016. A)$250,000 B)$300,000 C)$400,000 D)$600,000

The lessee depreciates leasehold improvements over the life of the improvements or the life of the lease,whichever is longer.