![INTERMEDIATE ACCOUNTING(LL)-W/2 ACCESS](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781260180657/9781260180657_smallCoverImage.gif)
INTERMEDIATE ACCOUNTING(LL)-W/2 ACCESS
9th Edition
ISBN: 9781260180657
Author: SPICELAND
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Textbook Question
Chapter 20, Problem 20.9BYP
Analysis Case 20–9
Various changes
• LO20–1 through LO20–4
Ray Solutions decided to make the following changes in its accounting policies on January 1, 2018:
- a. Changed from the cash to the accrual basis of accounting for recognizing revenue on its service contracts.
- b. Adopted straight-line
depreciation for all future equipment purchases, but continued to use accelerated depreciation for all equipment acquired before 2018. - c. Changed from the LIFO inventory method to the FIFO inventory method.
Required:
For each accounting change Ray undertook, indicate the type of change and how Ray should report the change. Be specific.
Expert Solution & Answer
![Check Mark](/static/check-mark.png)
Want to see the full answer?
Check out a sample textbook solution![Blurred answer](/static/blurred-answer.jpg)
Students have asked these similar questions
Exercise 20-16 (Static) Accounting change [LO20-4]
The Peridot Company purchased machinery on January 2, 2019, for $800,000. A five-year life was estimated and no residual value was anticipated. Peridot decided to use the straight-line depreciation method and recorded $160,000 in depreciation in 2019 and 2020. Early in 2021, the company revised the total estimated life of the machinery to eight years.Required:1. What type of change is this?2. Is Peridot required to revise prior years’ financial statements as a result of the change?3. Is Peridot required to provide a disclosure note to report the change?4. Determine depreciation for 2021.
Question 40 of 50
View Policies
-12
!!!
Current Attempt in Progress
Cullumber Co. uses straight-line depreciation. Cullumber Co. purchased machinery that cost $3050000 on January 4, 2019. The entire
cost was recorded as an expense. The machinery has a 9-year life and a $205000 residual value. The error was discovered on
December 20, 2021. Ignore income tax considerations.
Before the correction was made, and before the books were closed on December 31, 2021, retained earnings was understated by
E 10-9
Acquisition cost;
noninterest-bearing
note
LO3
On January 1, 2013, Byner Company purchased a used tractor. Byner paid $5,000 down and signed a
noninterest-bearing note requiring $25,000 to be paid on December 31, 2015. The fair value of the tractor is not
determinable. An interest rate of 10% properly reflects the time value of money for this type of loan agreement.
The company's financial year-end is December 31.
Required:
1. Prepare the journal entry to record the acquisition of the tractor. Round computations to the nearest dollar.
2. How much interest expense will the company include in its 2013 and 2014 income statements for this note?
3. What is the amount of the liability the company will report in its 2013 and 2014 statements of financial
position for this note?
Chapter 20 Solutions
INTERMEDIATE ACCOUNTING(LL)-W/2 ACCESS
Ch. 20 - Prob. 20.1QCh. 20 - There are three basic accounting approaches to...Ch. 20 - Prob. 20.3QCh. 20 - Lynch Corporation changes from the...Ch. 20 - Sugarbaker Designs Inc. changed from the FIFO...Ch. 20 - Most changes in accounting principles are recorded...Ch. 20 - Southeast Steel, Inc., changed from the FIFO...Ch. 20 - Prob. 20.8QCh. 20 - Its not easy sometimes to distinguish between a...Ch. 20 - For financial reporting, a reporting entity can be...
Ch. 20 - Prob. 20.11QCh. 20 - Describe the process of correcting an error when...Ch. 20 - Prob. 20.13QCh. 20 - If it is discovered that an extraordinary repair...Ch. 20 - Prob. 20.15QCh. 20 - Change in inventory methods; FIFO method to the...Ch. 20 - Change in inventory methods; average cost method...Ch. 20 - Change in inventory methods; FIFO method to the...Ch. 20 - Change in depreciation methods LO203 Irwin, Inc.,...Ch. 20 - Prob. 20.5BECh. 20 - Book royalties LO204 Three programmers at Feenix...Ch. 20 - Warranty expense LO204 In 2017, Quapau Products...Ch. 20 - Change in estimate; useful life of patent LO204...Ch. 20 - Prob. 20.9BECh. 20 - Error correction LO206 In 2018, internal auditors...Ch. 20 - Prob. 20.11BECh. 20 - Error correction LO206 In 2018, the internal...Ch. 20 - Change in principle; change in inventory methods ...Ch. 20 - Change in principle; change in inventory methods ...Ch. 20 - Change from the treasury stock method to retired...Ch. 20 - Change in principle; change to the equity method ...Ch. 20 - Prob. 20.5ECh. 20 - FASB codification research LO202 Access the FASB...Ch. 20 - Change in principle; change in inventory cost...Ch. 20 - Change in inventory methods; FIFO method to the...Ch. 20 - Change in inventory methods; FIFO method to the...Ch. 20 - Change in depreciation methods LO203 For...Ch. 20 - Change in depreciation methods LO203 The Canliss...Ch. 20 - Book royalties LO204 Dreighton Engineering Group...Ch. 20 - Loss contingency LO204 The Commonwealth of...Ch. 20 - Warranty expense LO204 Woodmier Lawn Products...Ch. 20 - Prob. 20.15ECh. 20 - Accounting change LO204 The Peridot Company...Ch. 20 - Change in estimate; useful life and residual value...Ch. 20 - Classifying accounting changes LO201 through...Ch. 20 - Error correction; inventory error LO206 During...Ch. 20 - Error corrections; investment LO206 Required: 1....Ch. 20 - Prob. 20.21ECh. 20 - Prob. 20.22ECh. 20 - Prob. 20.23ECh. 20 - Inventory errors LO206 Indicate with the...Ch. 20 - Classifying accounting changes and errors LO201...Ch. 20 - Change in inventory costing methods; comparative...Ch. 20 - P 20-2 Change in principle; change in method of...Ch. 20 - Change in inventory costing methods; comparative...Ch. 20 - Change in inventory methods LO202 The Rockwell...Ch. 20 - Change in inventory methods LO202 Fantasy...Ch. 20 - Change in principle; change in depreciation...Ch. 20 - Depletion; change in estimate LO204 In 2018, the...Ch. 20 - Accounting changes; six situations LO201, LO203,...Ch. 20 - Prob. 20.9PCh. 20 - Inventory errors LO206 You have been hired as the...Ch. 20 - Error correction; change in depreciation method ...Ch. 20 - Accounting changes and error correction; seven...Ch. 20 - Prob. 20.13PCh. 20 - Prob. 20.14PCh. 20 - Prob. 20.15PCh. 20 - Prob. 20.16PCh. 20 - Prob. 20.17PCh. 20 - Integrating Case 201 Change to dollar-value LIFO ...Ch. 20 - Prob. 20.2BYPCh. 20 - Prob. 20.3BYPCh. 20 - Analysis Case 204 Change in inventory methods;...Ch. 20 - Prob. 20.5BYPCh. 20 - Prob. 20.6BYPCh. 20 - Analysis Case 208 Various changes LO201 through...Ch. 20 - Analysis Case 209 Various changes LO201 through...Ch. 20 - Prob. 20.10BYPCh. 20 - Prob. 20.11BYPCh. 20 - Prob. 20.12BYPCh. 20 - Prob. 1CCTC
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Question 3What is the proper solution for this problem? B. On August 1, 2021, the board of directors of LL Co. voted to approve the disposal of one of its B division.The sale is expected to occur in June of next year. The B division's revenue and expenses for the period from January 1 to July 31 amounted to P14,000,000 and P10,000,000, respectively. For the period from August 1 to December 31, B Division's revenue amounted to P5,000,000 while expenses totaled P4,500,000. The carrying amount of B Division's net assets on December 31, 2021 was P21,000,000 and the fair value less cost of disposal was P25,000,000. The sale contract requires the company to pay termination cost of affected employees in the amount of P1,200,000 to be paid on September 30, 2022. The income tax rate is 30%. Required:25 – 27. Determine the income (loss) net of tax from discontinued operation.arrow_forwardCH 20 HW i 10 1 Saved Help Save & Exit Submit Check my work During 2022 (its first year of operations) and 2023, Fieri Foods used the FIFO inventory costing method for both financial reporting and tax purposes. At the beginning of 2024, Fieri decided to change to the average method for both financial reporting and tax purposes. points Income components before income tax for 2022, 2023, and 2024 were as follows: ($ in millions) Revenues 2022 $ 380 2023 2024 $ 390 $ 420 Cost of goods sold (FIFO) (38) (40) (46) eBook Cost of goods sold (average) (52) (56) (62) Operating expenses (242) (250) (254) Print References Dividends of $20 million were paid each year. Fieri's fiscal year ends December 31. Required: 1. Prepare the journal entry at the beginning of 2024 to record the change in accounting principle. (Ignore income taxes.) 2. Prepare the 2024-2023 comparative income statements. 3. & 4. Determine the balance in retained earnings at January 1, 2023, as Fieri reported using FIFO method…arrow_forwardQuestion 19 of 20 View Policies Temporary difference Installment sales Depreciation Current Attempt in Progress Based on the following information, compute 2025 taxable income for Sheridan Co. assuming that its pre-tax accounting income for the year ended December 31, 2025 is $465000. Unearned rent < O $470000 O $979000 O $372000 O $558000 Future taxable (deductible) amount $389000 $125000 -/1 ($421000) !!!arrow_forward
- A Each of the following situations is independent: B CD F G H K L M N R. U V X Y 1 2 1. Change in estimated useful life and residualvalue. Company XYZ purchases equipment on 1 January 20x6 for 3 4 $ 42,000 The company uses the straight line method of depreciation, taking a full year's depreciation in the year 5 of acquisition. The equipment has an estimated residual value of $8,000.00 and an estimated useful life of 4 years. In 20x7, the company decides that the machine really has an origional total life of 5 years and 7 a residual value of $ 7,000.00 8 9 How much is the depreciation expense for 20x7? 10 11 Solution: 12 13 14 15 16 17 18 2. Retrospective change in accounting policy. A private company changes its method of accounting for long term 19 construction contracts from the percentage of completion method (PC) to the compelted contract method (CC) in 20x7. 20 The years affected by the change, and incomes under both methods, appear below (ignore income tax) 21 22 Year 23 20x5 24…arrow_forwardQuestion 12 of 20 View Policies Current Attempt in Progress Pina Corporation had net income for 2024 of $2960000. Additional information is as follows: Depreciation of plant assets Amortization of intangibles Increase in accounts receivable Increase in accounts payable $1208000 O $2484000. O $4270000. O $4530000. O $4400000. 232000 417000 547000 Pina's net cash provided by operating activities for 2024 wasarrow_forwardChapter 6 - Correction of Errors COLKSCCIOLU CLEO12 PROBLEM 6-2 Counterbalancing Errors 2a0 WaIVa0 ATTAN You discovered the following errors in connection with your examination of the financial statements of Jane Corporation: 1) Accrued rent expense of P10,000 was not recorded at the end of 2020. 2) Accrued interest receivable of P15,000 was not recorded at the end of 2020. 3) The company paid one-year insurance premium of P24,000 effective April 1, 2020. The entire amount was debited to expense account and no adjustment was made at the end of 2020. 4) The company leased a portion of its building for P48,000. The term of the poleaol idease is one year ending April 30, 2021. Collection of rentwas credited to rent revenue account. At the end of 2020, no entry was made to take the unearned portion of the amount collected. up The following data were extracted from the financial statements of Jane Corporation: 00 000,00E 2020 2021 Net income Working capital RE, end of the year 100,000…arrow_forward
- Question 2 of 4 > -/2 View Policies Current Attempt in Progress At the end of 2020, Crown Point Corp. has accounts receivable of $479,200 and an allowance for doubtful accounts of $30,300. On January 24, 2021, Crown Point learns that its $11,600 receivable from Hutley Inc. is not collectible. Management authorizes a write off. But on March 4, 2021, Crown Point Corp. receives payment in full of $11,600 from Hutley Inc. after the write off. Prepare the required journal entries to record this transaction. (List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Date Account Titles and Explanation Debit Credit Mar. 4 (To reverse write off of account receivable) Mar. 4 (To record collection of account receivable) eTextbook and Media List of Accounts IIarrow_forwardProblem 4 The Huawei Corporation reported the following net income: 2020-P320,000 2021 - P380,000 An investigation of the accounts in 2023 reveals the following errors: Errors a. Understatement of unused supplies b. Overstatement of merchandise inventory c. Omission of accrued wages d. Overstatement of unearned subscription income 2022-P 430,000 As of December 31 2021 2020 P 10,000 30,000 2,400 P - 50,000 7,000 3,000 1. Determine the net over/understatement of the net income of 2020, 2021 and 2022. 2. Determine the corrected net income of 2020, 2021 and 2022. 3. Prepare the necessary correcting entries as of December 31, 2022. 2022 P 5,000 8,000 4,200arrow_forwardProblems 26-30 assume that a U.S.-based company is issuing securities to foreign investors who require financial statements prepared in accordance with IFRS. Thus, adjustments to convert from U.S. GAAP to IFRS must be made. Ignore income taxes for each problem.Hirsch Company acquired equipment at the beginning of 2017 at a cost of $135,000. The equipment has a five-year life with no expected salvage value and is depreciated on a straight-line basis. At December 31, 2017, Hirsch compiled the following information related to this equipment:a. Determine the appropriate accounting for this equipment for the years ending December 31, 2017, and December 31, 2018, under (1) U.S. GAAP and (2) IFRS.b. Prepare the entry(ies) that Hirsch would make on the December 31, 2017, and December 31, 2018, conversion worksheets to convert U.S. GAAP balances to IFRS. Ignore the possibility of any additional impairment at the end of 2018.arrow_forward
- + Chapter 8 Graded HW Question 2 of 4 -/ 1 View Policies Current Attempt in Progress At the end of 2016, Swifty Corporation has accounts receivable of $673,200 and an allowance for doubtful accounts of $24,010. On January 24, 2017, it is learned that the company's receivable from Madonna Inc. is not collectible and therefore management authorizes a write-off of $4,147. (a) Prepare the journal entry to record the write-off. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit (b) What is the cash realizable value of the accounts receivable before the write-off and after the write-off? Before Write-Off After Write-Off Cash realizable value $ $ List of Accounts 激活Windows 转到“设置“以激活Windows. Save for Later Attempts: 0 of 2 used Submit Answerarrow_forwardProblems 18–25 assume that a foreign company using IFRS is owned by a company using U.S. GAAP. Thus, IFRS balances must be converted to U.S. GAAP to prepare consolidated financial statements. Ignore income taxes for each problem.Surat Limited paid cash to acquire an aircraft on January 1, 2017, at a cost of 30,000,000 rupees. The aircraft has an estimated useful life of 40 years and no salvage value. The company has deter-mined that the aircraft is composed of three significant components with the following original costs (in rupees) and estimated useful lives:The U.S. parent of Surat does not depreciate assets on a component basis, but instead depreciates assets over their estimated useful life as a whole.a. Determine the appropriate accounting for this aircraft for the years ending December 31, 2017, and December 31, 2018, under (1) IFRS and (2) U.S. GAAP.b. Prepare the entry(ies) that the U.S. parent would make on the December 31, 2017, and December 31, 2018, conversion worksheets…arrow_forwardExercise 14-8 (Algo) Payback Period and Simple Rate of Return [LO14-1, LO14-6] [The following information applies to the questions displayed below.] Nick's Novelties, Incorporated, is considering the purchase of new electronic games to place in its amusement houses. The games would cost a total of $672,000, have a fifteen-year useful life, and have a total salvage value of $67,200. The company estimates annual revenues and expenses associated with the games as follows: Revenues Less operating expenses: Commissions to amusement houses Insurance Depreciation Maintenance Net operating income Exercise 14-8 Part 1 (Algo) $ 90,000 36,000 40,320 50,000 $ 260,000 216, 320 $ 43,680 Required: 1a. Compute the payback period associated with the new electronic games. 1b. Assume Nick's Novelties, Incorporated, will not purchase new games unless they provide a payback period of five years or less. Would the company purchase the new games? Complete this question by entering your answers in the tabs…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Accounting Information SystemsFinanceISBN:9781337552127Author:Ulric J. Gelinas, Richard B. Dull, Patrick Wheeler, Mary Callahan HillPublisher:Cengage Learning
![Text book image](https://www.bartleby.com/isbn_cover_images/9781337552127/9781337552127_smallCoverImage.gif)
Accounting Information Systems
Finance
ISBN:9781337552127
Author:Ulric J. Gelinas, Richard B. Dull, Patrick Wheeler, Mary Callahan Hill
Publisher:Cengage Learning
Accounting Changes and Error Analysis: Intermediate Accounting Chapter 22; Author: Finally Learn;https://www.youtube.com/watch?v=c2uQdN53MV4;License: Standard Youtube License