1. What are the quartette categories of versions discussed in this chapter and recognize by the history
art?
a. Change in Principle
b. Change in Estimate
c. Change in Reporting Entity
d. Changes Due to Errors
2. Give an example of each of the four categories?
See acts A and B for example and modes used.- these will be on the midterm in some form.
3. What are the accounting treatments employed for these four categories:
a. The General Rule: Current or Catch-Up Approach
and Retroactive Approach When Required
and the Special Change to last in first out rule not on the midterm, just know there is a special treatment
b. Current and Prospective Approach
c. Retroactive Approach
d. Retroactive Approach
class period A How changes or corrections are recognized.
For each of the pursuit items, indicate the type of accounting change and how each is recognized in the
accounting records in the current year.
(a) Change from straight-line method of depreciation to sum-of-the-years-digits
(b) Change from the cash home to accrual basis of accounting
(c) Change from FIFO to LIFO method for inventory military rank purposes
(d) Change from presentation of statements of individual companies to presentation of consolidated statements
(e) Change due to failure to record depreciation in a previous period
(f)
Change in the realizability of certain receivables
(g) Change from LIFO to FIFO method for inventory valuation purposes
Solution Exercise A
(a) Change in accounting principle; cumulative prepare on prior years, net of tax; pro forma info; no
restatement.
(b) Correction of an error; restatement of financial statements of all prior periods presented; adjustment of
beginning retained earnings of the current period.
(c) Change in accounting principle; no cumulative effect or restatement; base inventory is the opening
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