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17 Jan 2018

Which is not an example of a change in accounting principle?

A change in the useful lifeof a depreciable asset
A change from LIFO to FIFO forinventory costing
A change to the full costingmethod in the extractive industries
A change from the cost methodto the equity method of accounting for investments

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Trinidad Tremblay
Trinidad TremblayLv2
19 Jan 2018
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Related questions

1. (TCO E) Which of the following isnot treated as a change in accounting principle? (Points :5)

A change fromcompleted-contract to percentage-of-completion
A change from LIFO to FIFO forinventory valuation
A change from full-cost tosuccessful efforts in the extractive industry
A change to a different methodof depreciation for plant assets

Question 2. 2. (TCO E) What type of accountingchange/correction should always be accounted for in the current andfuture accounting periods? (Points : 5)

Change in accountingprinciple
Change in reportingentity
Change in accountingestimate
Correction of anerror

Question 3. 3. (TCO E) On December 31, 2013,Gifts Galore, Inc. appropriately changed its inventory valuationmethod from weighted-average cost to FIFO method for financialstatement and income tax purposes. The change will result in a$3,600,000 increase in the beginning inventory at January 1, 2013.Assume a 35% income tax rate. The cumulative effect of thisaccounting change on beginning retained earnings is (Points :5)

$0.
$1,260,000.
$3,600,000.
$2,340,000.

Which of the following changes should be accounted for using the retrospective approach?

a. A change in the estimated life of a depreciable asset

b. A change in the estimated life of a depreciable asset

c. A change to the LIFO method of costing inventories.

d. A change in accounting for long-term construction contracts by recognizing revenue over time rather than when the contract is completed.

The four types of accounting changes, including errorcorrection,are
changein accounting principle;
changein accounting estimate;
changein reporting entity; and
errorcorrection.

Required:
The following are a series of situations. Indicate the type ofchange.
1 Changingthe companies included in combined financial statements
2 Changein both estimate and acceptable accounting principles
3 Changefrom presenting nonconsolidated to consolidated financialstatements
4 Changefrom FIFO to LIFO inventory procedures
5 Changein amortization period for an intangible asset
6 Changedue to failure to recognize an accrued (uncollected) revenue
7 Changedue to charging a new asset directly to an expense account
8 Changedue to understatement of inventory
9 Changefrom straight-line to sum-of-the-years'-digits method ofdepreciation
10 Change inresidual value of a depreciable plant asset
11 Change inthe loss rate on warranty costs
12 Change inlife of a depreciable plant asset
13 Change dueto failure to recognize and accrue income
14 Change inexpected recovery of an account receivable
15 Change fromexpensing to capitalizing certain costs, due to a change in periodsbenefited

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