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For Each Change or Error Indicate How It Would Be

Question 82

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For each change or error indicate how it would be accounted for

Premises:

Responses:

Changed remaining service life from 8 years to 10 years

Retrospective adjustment

Change from an unacceptable accounting method to an acceptable

Prospective adjustment

Received money won in a law suit

None of the choices

Inventory write down due to obsolescence

Change in rate used to calculate warranty costs

Change from FIFO to average costs inventory method

Discovered errors in unrecorded expenses from a prior period

Purchased another company which now requires the financial statements to be consolidated.

Premises:

Changed remaining service life from 8 years to 10 years

Change from an unacceptable accounting method to an acceptable

Received money won in a law suit

Inventory write down due to obsolescence

Change in rate used to calculate warranty costs

Change from FIFO to average costs inventory method

Discovered errors in unrecorded expenses from a prior period

Purchased another company which now requires the financial statements to be consolidated.

Responses:

Retrospective adjustment

Prospective adjustment

None of the choices

Correct Answer:

Premises:

Responses:

Changed remaining service life from 8 years to 10 years

Change from an unacceptable accounting method to an acceptable

Received money won in a law suit

Inventory write down due to obsolescence

Change in rate used to calculate warranty costs

Change from FIFO to average costs inventory method

Discovered errors in unrecorded expenses from a prior period

Purchased another company which now requires the financial statements to be consolidated.