(ii)Fundamental Assumptions are always required to be disclosed in the financial statements. (iii) Change in Accounting Estimate has to be given retrospective effect. (iv) Economic life is 6 years, lease term is 2.5 years, but the asset is of a special nature, and has been procured only for use of lessee. This is an operating lease. (v) Change in Method of Depreciation is regarded as change in Accounting Policy of the entity.

(ii)Fundamental Assumptions are always required to be disclosed in the financial statements. (iii) Change in Accounting Estimate has to be given retrospective effect. (iv) Economic life is 6 years, lease term is 2.5 years, but the asset is of a special nature, and has been procured only for use of lessee. This is an operating lease. (v) Change in Method of Depreciation is regarded as change in Accounting Policy of the entity.

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

Chapter22: Accounting For Changes And Errors.

Section: Chapter Questions

Problem 4MC: A change in the expected service life of an asset arising because additional information has been...

See similar textbooks

Similar questions

Which of the following statements related to long-lived assets is true? Depreciation is calculated the same for financial reporting purposes and income tax purposes. If a company changes a depreciation estimate, it does not require a prior period adjustment. Depreciation is the process to value an asset at its fair market value. There is only one test to record an asset's impairment.
There are various types of accounting changes, each of which is required to be reported differently. Required: 1. What type of accounting change is a change from the sum-of-the-years’-digits method of depreciation to the straight-line method for previously recorded assets? Under what circumstances does this type of accounting change occur? 2. What type of accounting change is a change in the expected service life of an asset arising because of more experience with the asset? Under what circumstances does this type of accounting change occur?
Statement 1: The right-of-use asset is required to be presented at net amount on the face of the statement of financial position at the end of each reporting period.Statement 2: The right-of-use asset shall be depreciated using its estimated useful life regardless of whether there is certainty or not that the underlying asset will be transferred to the lessee at the end of lease term. Both statements are correct Only statement 2 is correct Both statements are incorrect. Only statement 1 is correct
Which of the following is not a required disclosure regarding intangible assets that are amortized for each period a company presents a balance sheet? a. the total costb. the accumulated amortizationc. the amortization expensed. the estimated amortization expense for the next ten years
An entity changed from the straight-line method to the declining-balance methodof depreciation for all newly acquired assets. This change has no material effect onthe current year’s financial statements but is reasonably certain to have a substantialeffect in later years. If the change is disclosed in the notes to the financial statements,the auditor should issue a report with a(n)(1) qualified opinion.(2) unqualified opinion with explanatory paragraph.(3) unqualified opinion.(4) qualified opinion with explanatory paragraph regarding consistency.
1.Which of the following is not a criterion for classifying an asset as current? -It is expected to be realized within twelve months after the reporting period. -It is expected to be realized, or intended for sale or consumption in the normal course of the entity’s normal operating cycle. -It is a cash and cash equivalent restricted for the purchase of a non-current asset within 12 months after the reporting period. -It is held primarily for the purpose of being traded. 2.All of the following are essential characteristics of an intangible assets, except -Expected future economic benefits. -Controlled by the enterprise. -identifiability -Indefinite useful life. 3.The admission of a new partner to an existing partnership -requires purchasing the interest of one or more existing partners. -causes a legal dissolution of the existing partnership. -may be accomplished only by investing assets in the partnership. -is almost always accompanied by the…
1. An entity made a very large arithmetical error in the calculation of depreciation. The correction of the error when discovered in the next year should be treated as Choices; A prior period adjustment Other expense for the year when the error was made. An increase in depreciation expense for the year when the error is discovered. A component of income for the year when the error is discovered but separately reported. 2. Items directly affecting Retained Earnings include all of the following Except Choices; Non-Current asset held for sale Prior period errors and Effect of change in accounting policy. Dividends declared Appropriation of retained earnings
The qualification of an asset to be classified as held for sale after reporting period but before the financial statements are authorized for issue a. is a non adjusting event after reporting period b. is an adjusting event after reporting period c. is an extraordinary item d. a or b
An entity has a loan due for repayment in six months' time but the entity has the option to refinance for repayment two years later. The entity plans to refinance this loan. In which section of the statement of financial position should this loan be presented? a. Current liabilities b. Current assets c. Noncurrent liabilities d. Noncurrent assets
which of the following statements is not correct? 1) generally accepted accounting principles require that the original cost of a long-term asset continue to appear in the asset account until the disposition of the asset. 2)The book value of a long-term asset is reduced each year as depreciation is recorded Building and trucks are examples of long -term assets 3)Salvage value is computed by subtracting the accumulated depreciation from the cost of a long-term asset.
There are various types of accounting changes, each of which is required to be reported differently.Required:1. What type of accounting change is a change from the sum-of-the-years’-digits method of depreciation to thestraight-line method for previously recorded assets as a result of new information related to production patterns? Under what circumstances does this type of accounting change occur?2. What type of accounting change is a change in the expected service life of an asset arising because of moreexperience with the asset? Under what circumstances does this type of accounting change occur?
Provide the term that best describes the statement in Column A. In your answer book just write the letter from column A with the correct term from Column B. Column A Column B A. Resources controlled by the entity for less than one year as a result of a past event from which future economic benefits are expected to likely to flow into the entity. Allowances for credit losses adjustment B. The account credited when recording the depreciation adjustment. Accrual concept C. The supporting document used for the depreciation entry. Income received in advance D. The difference between the original cost and the accumulated depreciation of the asset. Accrued income E. When the selling price is less than the carrying value. Consumable stores on hand F. The concept where all expenses is assigned to the financial period in which they were incurred. Carrying value G. The account to be debited when recording the…