Chap020 (accounting) 42 - retrospectively Change from the...

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11. Indicate the nature of each of the situations described below using the following three-letter code. 1. Change in principle reported retrospectively Technological advance that renders worthless a patent with an unamortized cost of $45,000. 2 2. Change in estimate Change from LIFO inventory costing to average inventory costing. 1 3. Change in principle reported prospectively Including in the consolidated financial statements a subsidiary acquired several years earlier that was appropriately not included in previous years. 7 4. Change in estimate Change from FIFO inventory method to LIFO. 3 5. Change in estimate Pension plan assets for a defined benefit pension plan achieving a rate of return in excess of the amount anticipated. 2 6. Change in principle reported
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Unformatted text preview: retrospectively Change from the direct write-off method to the allowance method for recording bad debt expense. (Assume bad debts are material in this case and have always been material.) 8 7. Change in reporting entity Change from declining balance depreciation to straight-line. 3 8. Prior period adjustment required Change from determining lower of cost or market for inventories by the individual item approach to the aggregate approach. 1 9. Change in principle reported prospectively Settling a lawsuit for less than the amount accrued previously as a loss contingency. 2 10. Change in estimate Change in the estimated useful life of office equipment. 2 AACSB: Reflective thinking Bloom's: Comprehension...
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