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b.The current income statement should include only footnote disclosures so readers will be awareof the change.c.A retrospective adjustment should be made to the financial statements.d.It should always be reflected as a cumulative effect in the current year’s financial statement.c
ACT 312A/612A, Fall 2017Page 5
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Chapter 5 / Exercise C5-10
Intermediate Accounting: Reporting and Analysis
Jones/Wahlen
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From Kieso, Weygandt, Warfield Study and Problem Solving GuidesChapter 45.Correction of errors:
ACT 312A/612A, Fall 2017Page 6
From Kieso, Weygandt, Warfield Study and Problem Solving GuidesChapter 44-1Kubitz Co had the following amounts in its income statements:201320142015Sales$ 46,800______$ 78,000Beginning inventory______14,20016,400Purchases (net)20,05050,200______Ending inventory14,200______18,600Cost of goods sold______48,000______Gross profit margin10,80014,40018,000Operating expenses____________6,000Income before tax8,800____________Tax expense (40%)______2,560______Net income (loss)______3,840______Required: Complete the table by filling in the missing amounts.4-2The following items are presented on financial statements:
Required: For each item listed above, describe (a) the criteria used to identify the item and (b) itsplacement on the financial statements. Assume each item is material.ACT 312A/612A, Fall 2017Page 7
From Kieso, Weygandt, Warfield Study and Problem Solving GuidesChapter 44-3Maher, Inc. reported income from continuing operations before taxes during 2015 of $790,000. Assumea 30% income tax rate on all items.Additional transactions occurring in 2015 but not considered in the $790,000 are as follows:1.The corporation experienced an uninsured flood loss in the amount of $90,000 during the year.The corporation has not experienced a flood loss before and floods in the corporation’s localityare rare.2.At the beginning of 2013, the corporation purchased a machine for $54,000 (salvage value of$9,000) that had a useful life of 6 years. The bookkeeper used straight-line depreciation for 2013,2014 and 2015 but failed to deduct the salvage value in computing the depreciation base.3.Sales of securities held as part of an investment portfolio resulted in a pre-tax loss of $57,000.Maher has incurred gains and losses from the sale of various securities held in its investmentportfolio in the past.4.The corporation disposed of its recreational division at a loss of $115,000 before taxes. Assumethat this transaction meets the criteria for discontinued operations.5.The corporation decided to change its method of inventory pricing from average-cost to the FIFOmethod. The effect of this change on prior years is to increase 2013 income by $60,000 and

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We have textbook solutions for you!
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Intermediate Accounting: Reporting and Analysis
The document you are viewing contains questions related to this textbook.
Chapter 5 / Exercise C5-10
Intermediate Accounting: Reporting and Analysis
Jones/Wahlen
Expert Verified

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