ACCT 3002-E3A Final-Fall 2017 Question (: Changes in a ascounting estimates,corr

Question

ACCT 3002-E3A Final-Fall 2017 Question (: Changes in a ascounting estimates,correction of errors 3 points In the blank to the left of each question, fill in the letter from the following list whi describes the presentation of the item on the financial statements of Sun Corporation for 2016. a. Change in estimate b. Prior period adjustment (not due to change in principle) c. Retrospective type accounting change d. None of the above 1. In 2016, the company changed its method of recognizing income from the cost-recovery method to the percentage-of-completion method. 2. At the end of 2016, an audit revealed that the corporation's allowance for doubtful accounts was too large and should be reduced to 2%, when the Depreciation on a truck, acquired in 2013, was understated because the The company switched from an average-cost to a FIFO inventory valuation In computing the depreciation in 2014 for equipment, an error was made audit was made in 2015, the allowance seemed appropriate useful life had been unintentionally overestimated method during the current year. 3. 4. 5. which overstated income in that year $75,000. The error was discovered in 2016. -6. In 2016, the company changed its method of depreciating plant assets from the double-declining balance method to the straight-line method.

Explanation / Answer

1)It is the change in accounting policy.thus the correct option which correctly describes the situation is retrospective type accounting change .

2)it is neither a change in accounting estimate nor a prior period item.

3) it is change in accounting estimate.

4)it is retrospective change in accounting as it is a change in accounting policy which requires retrospective effect of the same.

5)it is a prior periodf item as error was made in prior period i.e in 2014

6) it requires retrospective change in accounting due to change in accounting policy. i.e change in method of depreciation

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