Accounting Chapter 20 Homework Estimated Remaining Life Years New

subject Type Homework Help
subject Pages 8
subject Words 1112
subject Authors David Spiceland, James Sepe, Mark Nelson, Wayne Thomas

Unlock document.

This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
page-pf1
Alternate Exercises and Problems 201
Chapter 20 Accounting Changes and
Error Corrections
EXERCISES
Exercise 20-1
A change in depreciation method is considered a change in accounting estimate
resulting from a change in accounting principle. In other words, a change in the
depreciation method is similar to changing the economic useful life of a depreciable
asset, and therefore the two events should be reported the same way. Accordingly,
Calculation of SYD depreciation
Adjusting entry (2016 depreciation):
page-pf2
Exercise 20-2
Requirement 1
To record the change:
Requirement 2
Emerson applies the average cost method retrospectively; that is, to all prior
periods as if it always had used that method. In other words, all financial statement
amounts for individual periods that are included for comparison with the current
page-pf3
Alternate Exercises and Problems 203
Exercise 20-3
Requirement 1
Accrued liability and expense
Warranty expense (4% x $720,000) ........................................................... 28,800
Requirement 2
Actual expenditures (summary entry)
Estimated warranty liability ($15,000 4,600) .......................... 10,400
page-pf4
204 Intermediate Accounting, 8/e
Problem 20-1
a. This is a change in estimate.
No entry is needed to record the change
2016 adjusting entry:
A disclosure note should describe the effect of a change in estimate on income
from continuing operations, net income, and related per-share amounts for the current
period.
b. This is a change in estimate.
No entry is needed to record the change
2016 adjusting entry:
Calculation of annual depreciation after the estimate change:
$4,000,000 Cost
$100,000 Old depreciation ($4,000,000 ÷ 40 years)
x 3 yrs (300,000) Depreciation to date (2013-2015)
PROBLEMS
page-pf5
Problem 20-1 (continued)
c. This is a change in accounting principle that usually is reported prospectively.
No entry is needed to record the change.
page-pf6
Problem 20-1 (continued)
d. This is a change in accounting estimate resulting from a change in accounting
principle.
No entry is needed to record the change
2016 adjusting entry:
Depreciation expense (determined below) ..................... 72,000
A change in depreciation method is considered a change in accounting estimate
resulting from a change in accounting principle. Accordingly, DD reports the change
prospectively; previous financial statements are not revised. Instead, the company
Calculation of SYD depreciation:
page-pf7
Alternate Exercises and Problems 207
Problem 20-1 (concluded)
e. This is a change in estimate.
To revise the liability on the basis of the new estimate:
Loss litigation .................................................................. 5,000,000
page-pf8
208 Intermediate Accounting, 8/e
Problem 20-2
a. To correct the error:
Equipment (cost) ...................................................................... 9,000
Accumulated depreciation ([$9,000 ÷ 5] x 2 years)) ................... 3,600
b. To reverse erroneous entry:
Cash ...................................................................................... 51,000
c. To correct the error:
Inventory ........................................................................................................... 112,000
Retained earnings ................................................................................... 112,000
d. To correct the error:
Retained earnings ([$10 x 4,000 shares] $4,000) ...................... 36,000
Paid-in capital excess of par .......................................... 36,000

Trusted by Thousands of
Students

Here are what students say about us.

Copyright ©2022 All rights reserved. | CoursePaper is not sponsored or endorsed by any college or university.