Reference no: EM131119164
Analysis of Three Accounting Changes and Errors listed below are three independent, unrelated sets of facts relating to accounting changes.
Situation 1
Sanford Company is in the process of having its first audit. The company has used the cash basis of accounting for revenue recognition. Sanford president, B. J. Jimenez, is willing to change to the accrual method of revenue recognition.
Situation 2
Hopkins Co. decides in January 2011 to change from FIFO to weighted-average pricing for its inventories.
Situation 3
Marshall Co. determined that the depreciable lives of its fixed assets are too long at present to fairly match the cost of the fixed assets with the revenue produced. The company decided at the beginning of the current year to reduce the depreciable lives of all of its existing fixed assets by 5 years. For each of the situations described, provide the information indicated below.
(a) Type of accounting change.
(b) Manner of reporting the change under current generally accepted accounting principles including a discussion, where applicable, of how amounts are computed.
(c) Effect of the change on the balance sheet and income statement.
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The company has decided to depreciate this machinery
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Discuss whether ecs should use the us dollar or currencies
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Upstream and downstream intercompany transfers
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Differences upstream-downstream intercompany transfers
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Effect of the change on the balance sheet
: Manner of reporting the change under current generally accepted accounting principles including a discussion, where applicable, of how amounts are computed.
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Explain the six components or sources of return
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How you think biographer-historian or social scientist
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Correction of a mathematical error in inventory pricing
: A change in the method of accounting for leases for tax purposes to conform with the financial accounting method. As a result, both deferred and current taxes payable changed substantially.
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Prepare a balance sheet and income statement
: Prepare a balance sheet, an income statement, and a retained earnings statement for the Canadian subsidiary for Year 2 in U.S. dollars, assuming that the Canadian dollar is the functional currency.
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