Question 1

SkiPark Company purchased a gondola for $440,000 (no residual value) at the beginning of 2013.The gondola was being depreciated over a 10-year life using the sum-of-the-years'-digits method.At the beginning of 2016,it was decided to change to straight-line.An accompanying disclosure note would include each of the following except:

Accepted Answer

A)  The effect of a change on any financial statement line items affected for all periods reported.
B)  Justification that the change is preferable.
C)  The cumulative effect of the change.
D)  The effect of a change on per share amounts affected for all periods reported.E) C) and D)
F) All of the above

Question 2

Error corrections require restatement of all the affected prior year financial statements reported in comparative financial statements.

Accepted Answer

A) True 
 B)False

Question 3

All changes reported using the retrospective approach require prior period adjustments.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following changes in inventory costing usually should not be reported by revising the financial statements of prior periods?

Accepted Answer

A)  The weighted-average method to the LIFO method.
B)  The weighted-average method to the FIFO method.
C)  FIFO method to the weighted-average method.
D)  LIFO method to the weighted-average method.E) A) and D)
F) B) and C)

Question 5

Red Corp.constructed a machine at a total cost of $70 million.Construction was completed at the end of 2012 and the machine was placed in service at the beginning of 2013.The machine was being depreciated over a 10-year life using the straight-line method.The residual value is expected to be $4 million.At the beginning of 2016,Red decided to change to the sum-of-the-years'-digits method.Ignoring income taxes,what will be Red's depreciation expense for 2016?

Accepted Answer

A)  $ 4.8 million.
B)  $ 5.4 million.
C)  $ 6.6 million.
D)  $11.55 million.E) B) and D)
F) A) and B)

Exam 20: Accounting Changes

Which of the following changes in inventory costing usually should not be reported by revising the financial statements of prior periods?

Correct Answer
verified

All changes reported using the retrospective approach require prior period adjustments.

Correct Answer
verified

Correct Answer
verified

Error corrections require restatement of all the affected prior year financial statements reported in comparative financial statements.

Correct Answer
verified

Correct Answer
verified

Exam 20: Accounting Changes

Which of the following changes in inventory costing usually should not be reported by revising the financial statements of prior periods?

Correct AnswerverifiedShow Answer

All changes reported using the retrospective approach require prior period adjustments.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Error corrections require restatement of all the affected prior year financial statements reported in comparative financial statements.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified