Matching
Indicate the nature of each of the following situations:
Premises:
Technological advance that renders worthless a patent with an unamortized cost of $45,000.
Change from LIFO inventory costing to average inventory costing.
Including in the consolidated financial statements a subsidiary acquired several years earlier that was appropriately not included in previous years.
Change from FIFO inventory method to LIFO.
Pension plan assets for a defined benefit pension plan achieving a rate of return in excess of the amount anticipated.
Change from the pay-as-you-go method to estimating warranty expense in the period the related product is sold.
Change from declining balance depreciation to straight-line.
Change from determining lower of cost or net realizable value for inventories by the individual item approach to the aggregate approach.
Settling a lawsuit for less than the amount accrued previously as a loss contingency.
Change in the estimated useful life of office equipment.
Responses:
CPR: Change in principle reported retrospectively
CPP: Change in principle reported prospectively
CES: Change in estimate
CRE: Change in reporting entity
PPA: Prior period adjustment required
Correct Answer:
Premises:
Responses:
Technological advance that renders worthless a patent with an unamortized cost of $45,000.
Change from LIFO inventory costing to average inventory costing.
Including in the consolidated financial statements a subsidiary acquired several years earlier that was appropriately not included in previous years.
Change from FIFO inventory method to LIFO.
Pension plan assets for a defined benefit pension plan achieving a rate of return in excess of the amount anticipated.
Change from the pay-as-you-go method to estimating warranty expense in the period the related product is sold.
Change from declining balance depreciation to straight-line.
Change from determining lower of cost or net realizable value for inventories by the individual item approach to the aggregate approach.
Settling a lawsuit for less than the amount accrued previously as a loss contingency.
Change in the estimated useful life of office equipment.
Premises:
Technological advance that renders worthless a patent with an unamortized cost of $45,000.
Change from LIFO inventory costing to average inventory costing.
Including in the consolidated financial statements a subsidiary acquired several years earlier that was appropriately not included in previous years.
Change from FIFO inventory method to LIFO.
Pension plan assets for a defined benefit pension plan achieving a rate of return in excess of the amount anticipated.
Change from the pay-as-you-go method to estimating warranty expense in the period the related product is sold.
Change from declining balance depreciation to straight-line.
Change from determining lower of cost or net realizable value for inventories by the individual item approach to the aggregate approach.
Settling a lawsuit for less than the amount accrued previously as a loss contingency.
Change in the estimated useful life of office equipment.
Responses:
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