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QUESTION 5 (15 Marks - 3 marks each) Jeffrey Ltd. is a private corporation. Set out below are various considerations pertaining to Jeffrey Ltd.
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QUESTION 5 (15 Marks - 3 marks each)<br/><br/><br/>Jeffrey Ltd. is

a private corporation. Set out below are various considerations pertaining to Jeffrey Ltd., and brought to your attention for the year ending December 31, 2018.


1.   Change from declining-balance depreciation to straight-line depreciation of all office machinery, to conform with foreign parent corporate guidelines relating to the expected useful life of such assets.


2.   Discovered that manufacturing equipment was being amortized using a 9% declining  balance basis, rather than being amortized over its nine year life according to corporate accounting policy.


3.   Capitalization and amortization of miscellaneous expenses incurred, related to the commencement of product research and development activities in the year


4.   Change in the percentage of annual warranty cost accrued from 3% of sales to 5% of sales in the year, to reflect the expansion of business operations across Canada.


5.   Average cost inventory valuation at the beginning of the year found to be incorrect due to employee theft in previous years. Management determines that it is unable to gather sufficient detail necessary to determine the opening balance.

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Subject: Accounting, Business

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