chapter 22

chapter 22 - CHAPTER 22 22 ACCOUNTING CHANGES AND...

Info iconThis preview shows pages 1–10. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 22-1 C H A P T E R C H A P T E R 22 22 ACCOUNTING CHANGES AND ACCOUNTING CHANGES AND ERROR ANALYSIS ERROR ANALYSIS Intermediate Accounting 13th Edition Kieso, Weygandt, and Warfield
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Chapter 22-2 Learning Objectives Learning Objectives
Background image of page 2
Chapter 22-3 Types of Accounting Changes: Change in Accounting Principle. Changes in Accounting Estimate. Change in Reporting Entity. Errors are not considered an accounting change. LO 1 Identify the types of accounting changes. Accounting Alternatives: 1) Diminish the comparability of financial information. 2) Obscure useful historical trend data. Accounting Changes
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Chapter 22-4 Average cost to LIFO. Completed-contract to percentage-of-completion. A change from one generally accepted accounting principle to another. Examples include: Changes in Accounting Principle LO 2 Describe the accounting for changes in accounting principles. Adoption of a new principle in recognition of events that have occurred for the first time or that were previously immaterial is not an accounting change.
Background image of page 4
Chapter 22-5 Three approaches for reporting changes: 1) Currently. 2) Retrospectively. 3) Prospectively (in the future). FASB requires use of the retrospective approach. Changes in Accounting Principle LO 2 Describe the accounting for changes in accounting principles. Rationale - Users can then better compare results from one period to the next.
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Chapter 22-6 Retrospective Accounting Change Approach Changes in Accounting Principle LO 3 Understand how to account for retrospective accounting changes. Company reporting the change 1) adjusts its financial statements for each prior period presented to the same basis as the new accounting principle. 2) adjusts the carrying amounts of assets and liabilities as of the beginning of the first year presented, plus the opening balance of retained earnings.
Background image of page 6
Chapter 22-7 Illustration: Denson Company has accounted for its income from long-term construction contracts using the completed-contract method. In 2010 the company changed to the percentage-of-completion method. Management believes this approach provides a more appropriate measure of the income earned. For tax purposes, the company uses the completed-contract method and plans to continue doing so in the future. (We assume a 40 percent enacted tax rate.) LO 3 Understand how to account for retrospective accounting changes. Retrospective Accounting Change: Long-Term Contracts Changes in Accounting Principle
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Chapter 22-8 LO 3 Income statements for 2008–2010 Changes in Accounting Principle Illustration 22-1
Background image of page 8
Chapter 22-9 Data for Retrospective Change Example Changes in Accounting Principle Illustration 22-2 Construction in Process 220,000 Deferred Tax Liability 88,000 Retained Earnings 132,000 LO 3 Understand how to account for retrospective accounting changes.
Background image of page 9

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 10
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 02/04/2011 for the course ACC 630 taught by Professor Mcarthy during the Spring '09 term at St. John's.

Page1 / 52

chapter 22 - CHAPTER 22 22 ACCOUNTING CHANGES AND...

This preview shows document pages 1 - 10. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online