For 2015, Pac Co. estimated its two-year equipment warranty costs based on $100 per unit sold in 2015. Experience during 2016 indicated that the estimate should have been based on $110 per unit. The effect of this $10 difference from the estimate is reported a. in 2016 income from continuing operations. b. as an accounting change, net of tax, below 2016 income from continuing operations. c. as an accounting change requiring 2015 financial statements to be restated. d. as a correction of an error requiring 2015 financial statements to be restated.

For 2015, Pac Co. estimated its two-year equipment warranty costs based on $100 per unit sold in 2015. Experience during 2016 indicated that the estimate should have been based on $110 per unit. The effect of this $10 difference from the estimate is reported a. in 2016 income from continuing operations. b. as an accounting change, net of tax, below 2016 income from continuing operations. c. as an accounting change requiring 2015 financial statements to be restated. d. as a correction of an error requiring 2015 financial statements to be restated.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter18: Accounting For Income Taxes

Section: Chapter Questions

Problem 9MC: Brooks Company reported a prior period adjustment of 512,000 in pretax financial "income" and...

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