intermediate accounting(fifteenth edition) ch22

CHAPTER 22 Accounting Changes and Error Analysis ASSIGNMENT CLASSIFICATION TABLE (BY TOPIC) Topics Questions Brief Exercises Exercises Problems Concepts for Analysis 1. Differences between change in principle, change in estimate, change in entity, errors. 2, 4, 6, 7,8, 9, 12, 13, 15, 21   8 3 1, 2, 3, 4 2. Accounting changes:           a. Comprehensive.       3, 6, 7 1, 2, 4, 5 b. Changes in estimate, changes in depreciation methods. 8, 9 4, 5, 9 3, 4, 6, 7, 8, 9, 10, 11, 12, 16, 17 1, 2, 4, 6, 7 1, 2, 3,4, 5, 6 c. Changes in accounting for long-term construction contracts. 2, 10 1, 2, 10 1, 8, 13 3 1, 2 d. Change from FIFO to average cost.     2, 8, 14   3 e. Change from FIFO to LIFO. 2, 11 10     1, 2 f. Change from LIFO. 8 3 2, 3, 5,8, 14 2, 5   g. Miscellaneous. 1, 3, 4, 5, 8 8, 9, 10     1, 5 3. Correction of an error.           a. Comprehensive. 8, 14, 15,17, 19 8, 9, 10 8, 15, 16, 18, 19, 20, 21 3, 6, 7, 8, 9, 10 2, 3, 4 b. Depreciation. 2, 18, 21 6, 7 9, 15,17, 18 1, 6, 8   c. Inventory. 9, 16, 20 10 7, 17, 18 2, 10 1, 2 *4. Changes between fair value and equity methods.   11, 12 22, 23 11, 12               *This material is dealt with in an Appendix to the chapter. ASSIGNMENT CLASSIFICATION TABLE (BY LEARNING OBJECTIVE) Learning Objectives Questions Brief Exercises Exercises Problems Concepts for Analysis 1. Identify the types of accounting changes.           2. Describe the accounting for changes in accounting principles. 1, 2, 3, 4     1 CA22-5 3. Understand how to account for retrospective accounting changes. 5, 6, 7, 8, 9, 10 1, 2, 3, 9, 10 1, 2, 3, 4, 5, 8, 13, 14 2, 3, 5 CA22-1, CA22-2, CA 22-3, CA22-4 4. Understand how to account for impracticable changes. 11   2     5. Describe the accounting for changes in estimates. 12 4, 5, 9 6, 7, 8, 9, 10, 11, 12 1, 2, 3, 4, 6 CA22-5, CA22-6 6. Identify changes in a reporting entity. 13         7. Describe the accounting for correction of errors. 15, 16, 17, 18, 19, 20, 21 6, 7, 8, 10 7, 8, 9, 15, 16, 17, 18,19, 20, 21 1, 2, 3, 6, 7, 8, 9, 10   8. Identify economic motives for changing accounting methods.           9. Analyze the effect of errors. 14   18, 19, 20, 21 6, 7, 8, 9, 10   *10. Make the computations and prepare the entries necessary to record a change from or to the equity method of accounting.   11, 12 22, 23 11, 12               ASSIGNMENT CHARACTERISTICS TABLE Item   Description Level of Difficulty Time(minutes) E22-1   Change in principle—long-term contracts. Moderate 10–15 E22-2   Change in principle—inventory methods. Moderate 10–15 E22-3   Accounting change. Difficult 25–30 E22-4   Accounting change. Difficult 25–30 E22-5   Accounting change. Difficult 30–35 E22-6   Accounting changes—depreciation. Difficult 30–35 E22-7   Change in estimate and error; financial statements. Moderate 25–30 E22-8   Accounting for accounting changes and errors. Simple 5–10 E22-9   Error and change in estimate—depreciation. Simple 15–20 E22-10   Depreciation changes. Moderate 20–25 E22-11   Change in estimate—depreciation. Simple 10–15 E22-12   Change in estimate—depreciation. Simple 20–25 E22-13   Change in principle—long-term contracts. Simple 10–15 E22-14   Various changes in principle—inventory methods. Moderate 20–25 E22-15   Error correction entries. Simple 15–20 E22-16   Error analysis and correcting entry. Simple 10–15 E22-17   Error analysis and correcting entry. Simple 10–15 E22-18   Error analysis. Moderate 25–30 E22-19   Error analysis and correcting entries. Simple 20–25 E22-20   Error analysis. Moderate 20–25 E22-21   Error analysis. Moderate 10–15 *E22-22   Change from fair value to equity. Complex 25–30 *E22-23   Change from equity to fair value. Moderate 15–20           P22-1   Change in estimate and error correction. Moderate 30–35 P22-2   Comprehensive accounting change and error analysis problem. Complex 30–40 P22-3   Error corrections and accounting changes. Complex 30–40 P22-4   Accounting changes. Moderate 40–50 P22-5   Change in principle—inventory—periodic. Moderate 30–35 P22-6   Accounting change and error analysis. Moderate 25–30 P22-7   Error corrections. Moderate 25–30 P22-8   Comprehensive error analysis. Difficult 30–35 P22-9   Error analysis. Moderate 20–25 P22-10   Error analysis and correcting entries. Complex 50–60 *P22-11   Fair value to equity method with goodwill. Moderate 20–25 *P22-12   Change from fair value to equity method. Moderate 20–25           CA22-1   Analysis of various accounting changes and errors. Moderate 25–35 CA22-2   Analysis of various accounting changes and errors. Moderate 20–30 CA22-3   Analysis of three accounting changes and errors. Moderate 30–35 CA22-4   Analysis of various accounting changes and errors. Moderate 20–30 CA22-5   Change in principle, estimate. Moderate 20–30 CA22-6   Change in estimate, ethics. Moderate 20–30           SOLUTIONS TO CODIFICATION EXERCISES CE22-1 Master Glossary (a)    A change that has the effect of adjusting the carrying amount of an existing asset or liability or altering the subsequent accounting for existing or future assets or liabilities. A change in accounting estimate is a necessary consequence of the assessment, in conjunction with the periodic presentation of financial statements, of the present status and expected future benefits and obligations associated with assets and liabilities. Changes in accounting estimates result from new information. Examples of items for which estimates are necessary are uncollectible receivables, inventory obsolescence, service lives and salvage values of depreciable assets, and warranty obligations. (b)    A change from one generally accepted accounting principle to another generally accepted accounting principle when there are two or more generally accepted accounting principles that apply or when the accounting principle formerly used is no longer generally accepted. A change in the method of applying an accounting principle also is considered a change in accounting principle. (c)    The process of revising previously issued financial statements to reflect the correction of an error in those financial statements. (d)    The application of a different accounting principle to one or more previously issued financial statements, or to the statement of financial position at the beginning of the current period, as if that principle had always been used, or a change to financial statements of prior accounting periods to present the financial statements of a new reporting entity as if it had existed in those prior years. CE22-2 According to FASB ASC 250-10-50-7 (Accounting Changes and Error Corrections—Disclosure): When financial statements are restated to correct an error, the entity shall disclose that its previously issued financial statements have been restated, along with a description of the nature of the error. The entity also shall disclose both of the following: