{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

HW_7 Accounting Changes with solution

HW_7 Accounting Changes with solution - Homework#7...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Homework #7: Accounting changes/errors (Ch 22), due on March 24. Problem 1: Red Inc. began operations January 1, 2010. In 2012 it changed its method of accounting for inventories from the average cost method to first-in, first-out (FIFO). If ending inventory had been determined under each of these two methods for both years, the results would have been: The company's income for 2011 and 2010 under average cost was $83,500 and $78,600, respectively. The income tax rate for Red is 30%. Required : Determine restated net income for Red Inc. for 2011 and 2010, after retrospectively applying the change in accounting principle. Solution to Problem 1:
Background image of page 1

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

View Full Document Right Arrow Icon
Problem 2: Black Corporation began operations January 1, 2010, purchasing equipment for $200,000. The equipment is estimated to have a five year useful life with no residual value. In 2012, Black changed its method of depreciating equipment from double-declining balance to straight-line. If depreciation expense had been computed under each of these two methods for 2010-2011, the results would have been: Required : Compute the depreciation expense that Black would report for 2012.
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}