Accounting Changes & Errors - CPA Financial Accounting and Reporting (FAR)
Card 1 of 16
The Charlotte Corporation buys a building on January 1, Year 1, for $900,000. The building is expected to have a useful life of 10 years and no salvage value. The double-declining balance method is used for depreciation purposes and the half-year convention is not elected. Early in Year 3, company officials decide to switch to the straight-line method of depreciation. What amount of depreciation expense should the company recognize in its Year 3 income statement?
The Charlotte Corporation buys a building on January 1, Year 1, for $900,000. The building is expected to have a useful life of 10 years and no salvage value. The double-declining balance method is used for depreciation purposes and the half-year convention is not elected. Early in Year 3, company officials decide to switch to the straight-line method of depreciation. What amount of depreciation expense should the company recognize in its Year 3 income statement?
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In Year 1, the company will report depreciation of $180K ($900K x 20%), bringing the year two beginning book value to $720K. In Year 2, the company will record depreciation of $144K ($720K x 20%), bringing the year 3 beginning book value to $576K. In Year 3, the company will amortize this amount evenly over the remaining 8 years of the asset's life.
In Year 1, the company will report depreciation of $180K ($900K x 20%), bringing the year two beginning book value to $720K. In Year 2, the company will record depreciation of $144K ($720K x 20%), bringing the year 3 beginning book value to $576K. In Year 3, the company will amortize this amount evenly over the remaining 8 years of the asset's life.
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Which of the following accounting changes would receive prospective treatment in the income statement?
Which of the following accounting changes would receive prospective treatment in the income statement?
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Changes in depreciation and changes in estimated useful lifes are applied proactively, not retroactively.
Changes in depreciation and changes in estimated useful lifes are applied proactively, not retroactively.
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Which of the following would be reported as an adjustment to beginning retained earnings for the earliest period presented?
Which of the following would be reported as an adjustment to beginning retained earnings for the earliest period presented?
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Both of these choices are presented as prior period adjustments by adjusting retained earnings in the earliest period presented.
Both of these choices are presented as prior period adjustments by adjusting retained earnings in the earliest period presented.
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Under IFRS, an entity is required to file the following financial statements initially?
Under IFRS, an entity is required to file the following financial statements initially?
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An entity just filing under IFRS needs to file 2 statements of; comprehensive income, income statements, cash flows, changes in equity, notes, and 3 balance sheets.
An entity just filing under IFRS needs to file 2 statements of; comprehensive income, income statements, cash flows, changes in equity, notes, and 3 balance sheets.
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The Charlotte Corporation buys a building on January 1, Year 1, for $900,000. The building is expected to have a useful life of 10 years and no salvage value. The double-declining balance method is used for depreciation purposes and the half-year convention is not elected. Early in Year 3, company officials decide to switch to the straight-line method of depreciation. What amount of depreciation expense should the company recognize in its Year 3 income statement?
The Charlotte Corporation buys a building on January 1, Year 1, for $900,000. The building is expected to have a useful life of 10 years and no salvage value. The double-declining balance method is used for depreciation purposes and the half-year convention is not elected. Early in Year 3, company officials decide to switch to the straight-line method of depreciation. What amount of depreciation expense should the company recognize in its Year 3 income statement?
Tap to reveal answer
In Year 1, the company will report depreciation of $180K ($900K x 20%), bringing the year two beginning book value to $720K. In Year 2, the company will record depreciation of $144K ($720K x 20%), bringing the year 3 beginning book value to $576K. In Year 3, the company will amortize this amount evenly over the remaining 8 years of the asset's life.
In Year 1, the company will report depreciation of $180K ($900K x 20%), bringing the year two beginning book value to $720K. In Year 2, the company will record depreciation of $144K ($720K x 20%), bringing the year 3 beginning book value to $576K. In Year 3, the company will amortize this amount evenly over the remaining 8 years of the asset's life.
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Which of the following accounting changes would receive prospective treatment in the income statement?
Which of the following accounting changes would receive prospective treatment in the income statement?
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Changes in depreciation and changes in estimated useful lifes are applied proactively, not retroactively.
Changes in depreciation and changes in estimated useful lifes are applied proactively, not retroactively.
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Which of the following would be reported as an adjustment to beginning retained earnings for the earliest period presented?
Which of the following would be reported as an adjustment to beginning retained earnings for the earliest period presented?
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Both of these choices are presented as prior period adjustments by adjusting retained earnings in the earliest period presented.
Both of these choices are presented as prior period adjustments by adjusting retained earnings in the earliest period presented.
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Under IFRS, an entity is required to file the following financial statements initially?
Under IFRS, an entity is required to file the following financial statements initially?
Tap to reveal answer
An entity just filing under IFRS needs to file 2 statements of; comprehensive income, income statements, cash flows, changes in equity, notes, and 3 balance sheets.
An entity just filing under IFRS needs to file 2 statements of; comprehensive income, income statements, cash flows, changes in equity, notes, and 3 balance sheets.
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The Charlotte Corporation buys a building on January 1, Year 1, for $900,000. The building is expected to have a useful life of 10 years and no salvage value. The double-declining balance method is used for depreciation purposes and the half-year convention is not elected. Early in Year 3, company officials decide to switch to the straight-line method of depreciation. What amount of depreciation expense should the company recognize in its Year 3 income statement?
The Charlotte Corporation buys a building on January 1, Year 1, for $900,000. The building is expected to have a useful life of 10 years and no salvage value. The double-declining balance method is used for depreciation purposes and the half-year convention is not elected. Early in Year 3, company officials decide to switch to the straight-line method of depreciation. What amount of depreciation expense should the company recognize in its Year 3 income statement?
Tap to reveal answer
In Year 1, the company will report depreciation of $180K ($900K x 20%), bringing the year two beginning book value to $720K. In Year 2, the company will record depreciation of $144K ($720K x 20%), bringing the year 3 beginning book value to $576K. In Year 3, the company will amortize this amount evenly over the remaining 8 years of the asset's life.
In Year 1, the company will report depreciation of $180K ($900K x 20%), bringing the year two beginning book value to $720K. In Year 2, the company will record depreciation of $144K ($720K x 20%), bringing the year 3 beginning book value to $576K. In Year 3, the company will amortize this amount evenly over the remaining 8 years of the asset's life.
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Which of the following accounting changes would receive prospective treatment in the income statement?
Which of the following accounting changes would receive prospective treatment in the income statement?
Tap to reveal answer
Changes in depreciation and changes in estimated useful lifes are applied proactively, not retroactively.
Changes in depreciation and changes in estimated useful lifes are applied proactively, not retroactively.
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Which of the following would be reported as an adjustment to beginning retained earnings for the earliest period presented?
Which of the following would be reported as an adjustment to beginning retained earnings for the earliest period presented?
Tap to reveal answer
Both of these choices are presented as prior period adjustments by adjusting retained earnings in the earliest period presented.
Both of these choices are presented as prior period adjustments by adjusting retained earnings in the earliest period presented.
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Under IFRS, an entity is required to file the following financial statements initially?
Under IFRS, an entity is required to file the following financial statements initially?
Tap to reveal answer
An entity just filing under IFRS needs to file 2 statements of; comprehensive income, income statements, cash flows, changes in equity, notes, and 3 balance sheets.
An entity just filing under IFRS needs to file 2 statements of; comprehensive income, income statements, cash flows, changes in equity, notes, and 3 balance sheets.
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The Charlotte Corporation buys a building on January 1, Year 1, for $900,000. The building is expected to have a useful life of 10 years and no salvage value. The double-declining balance method is used for depreciation purposes and the half-year convention is not elected. Early in Year 3, company officials decide to switch to the straight-line method of depreciation. What amount of depreciation expense should the company recognize in its Year 3 income statement?
The Charlotte Corporation buys a building on January 1, Year 1, for $900,000. The building is expected to have a useful life of 10 years and no salvage value. The double-declining balance method is used for depreciation purposes and the half-year convention is not elected. Early in Year 3, company officials decide to switch to the straight-line method of depreciation. What amount of depreciation expense should the company recognize in its Year 3 income statement?
Tap to reveal answer
In Year 1, the company will report depreciation of $180K ($900K x 20%), bringing the year two beginning book value to $720K. In Year 2, the company will record depreciation of $144K ($720K x 20%), bringing the year 3 beginning book value to $576K. In Year 3, the company will amortize this amount evenly over the remaining 8 years of the asset's life.
In Year 1, the company will report depreciation of $180K ($900K x 20%), bringing the year two beginning book value to $720K. In Year 2, the company will record depreciation of $144K ($720K x 20%), bringing the year 3 beginning book value to $576K. In Year 3, the company will amortize this amount evenly over the remaining 8 years of the asset's life.
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Which of the following accounting changes would receive prospective treatment in the income statement?
Which of the following accounting changes would receive prospective treatment in the income statement?
Tap to reveal answer
Changes in depreciation and changes in estimated useful lifes are applied proactively, not retroactively.
Changes in depreciation and changes in estimated useful lifes are applied proactively, not retroactively.
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Which of the following would be reported as an adjustment to beginning retained earnings for the earliest period presented?
Which of the following would be reported as an adjustment to beginning retained earnings for the earliest period presented?
Tap to reveal answer
Both of these choices are presented as prior period adjustments by adjusting retained earnings in the earliest period presented.
Both of these choices are presented as prior period adjustments by adjusting retained earnings in the earliest period presented.
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Under IFRS, an entity is required to file the following financial statements initially?
Under IFRS, an entity is required to file the following financial statements initially?
Tap to reveal answer
An entity just filing under IFRS needs to file 2 statements of; comprehensive income, income statements, cash flows, changes in equity, notes, and 3 balance sheets.
An entity just filing under IFRS needs to file 2 statements of; comprehensive income, income statements, cash flows, changes in equity, notes, and 3 balance sheets.
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