Ray Solutions decided to make the following changes in its accounting policies on January 1, 2024: a.
Question:
Ray Solutions decided to make the following changes in its accounting policies on January 1, 2024:
a. Changed from the cash to the accrual basis of accounting for recognizing revenue on its service contracts.
b. Adopted straight-line depreciation for all future equipment purchases, but continued to use accelerated depreciation for all equipment acquired before 2024.
c. Changed from the LIFO inventory method to the FIFO inventory method.
Required:
For each accounting change Ray undertook, indicate (a) the type of change and (b) whether Ray should report the change retrospectively or prospectively.
Step by Step Answer:
Change from cash basis to the accrual basis a Error correction The change from cash basis recognitio...View the full answer
Related Video
In accounting terms, depreciation is defined as the reduction of the recorded cost of a fixed asset in a systematic manner until the value of the asset becomes zero or negligible. An example of fixed assets are buildings, furniture, office equipment, machinery, etc. The land is the only exception that cannot be depreciated as the value of land appreciates with time. Depreciation allows a portion of the cost of a fixed asset to be the revenue generated by the fixed asset. This is mandatory under the matching principle as revenues are recorded with their associated expenses in the accounting period when the asset is in use. This helps in getting a complete picture of the revenue
Students also viewed these Business questions
-
Ray Solutions decided to make the following changes in its accounting policies on January 1, 2011: 1. Changed from the cash to the accrual basis of accounting for recognizing revenue on its service...
-
Ray Solutions decided to make the following changes in its accounting policies on January 1, 2018: a. Changed from the cash to the accrual basis of accounting for recognizing revenue on its service...
-
Ray Solutions decided to make the following changes in its accounting policies on January 1, 2021: a. Changed from the cash to the accrual basis of accounting for recognizing revenue on its service...
-
A firm has total debt of $6,000,000 and stockholder's equity is $4,000,000. The firm wants to calculate equity-to- total asset ratio in order to make decision about further raise of capital. What is...
-
Assume that consumption and permanent income are derived as shown in equations (15.2) and (15.3). In those equations, let = 0.8 and j = 0.5. Assume that 2010 actual income of $30,000 equals permanent...
-
Two points P and Q are chosen randomly, one on each of two adjacent sides of a unit square (see figure). What is the probability that the area of the triangle formed by the sides of the square and...
-
The Alpha Company is a medium-sized company which assembles robots from parts and subassemblies ordered to specification. All work done by outside processors is completed prior to the time the Alpha...
-
At Jaymes Company, it costs $30 per unit ($20 variable and $10 fixed) to make a product at full capacity that normally sells for $45. A foreign wholesaler offers to buy 3,000 units at $25 each....
-
Diaz Company owns a machine that cost $125,800 and has accumulated depreciation of $91,700. Prepare the entry to record the disposal of the machine on January 1 in each separate situation. 1. The...
-
Before you prepare the eight adjusting journal entries below in an Excel spreadsheet, please make sure corrections have been made to any previous journal entries. The following are the adjusting...
-
Southeast Steel, Inc., changed from the FIFO inventory costing method to the LIFO method during 2024. How would this change likely be reported in the 2024 comparative financial statements?
-
Millington Materials is a leading supplier of building equipment, building products, materials, and timber for sale, with over 200 branches across the Mid-South. On January 1, 2024, management...
-
The 20-lb collar is constrained to move on the smooth rod. It is attached to the three springs which are unstretched when s = 0. If the collar is displaced s = 0.5 and released from rest, determine...
-
This is a use case for an UBER like application called 'Mishwar' where a UML design class diagram DCD is required for this use case.Cheshire Cat then made additional payments as follows, based upon...
-
Justin is an unlucky soul who got Herpes Simplex Virus 1 (HSV-1) from his girlfriend in junior high. Now he is a carrier for HSV-1 and anytime he experiences high levels of stress, he develops cold...
-
It was the first pregnancy for Barbara Ann, 29 years old, and it was normal. During pregnancy, she reported a "small" breast enlargement. Your child is breastfed for the first time within 2 hours...
-
13. The company you work for has downsized and you have lost your job. You receive a severance package of $65 000 and decide to invest it for retirement, earning an average of 7% per year. It has...
-
Context/Scenario In the last few years, employee well-being has become an increasingly critical issue in people management.Organisations which have not paid sufficient attention to this issue risk...
-
Fill in each box with the appropriate reagent: a. b. c. CH COH 2. CH,CH,CH,CHOH- , CH,CHCH2CH - 2. Br + HOCC2CH2CH2CH2COH
-
If a force of F = 50 Ib is applied to the pads at A and C, determine the smallest dimension d required for equilibrium if the spring has an unstretched length of 1 ft. B 1 ft 1 ft F k = 15016/fr 1ft...
-
Terms of a lease agreement and related facts were: a. Leased asset had a retail cash selling price of $100,000. Its useful life was six years with no residual value (straight-line depreciation). b....
-
The following relate to an operating lease agreement: a. The lease term is 3 years, beginning January 1, 2011. b. The leased asset cost the lessor $800,000 and had a useful life of eight years with...
-
Terms of a lease agreement and related facts were: a. Costs of negotiating and consummating the completed lease transaction incurred by the lessor were $4,242. b. The retail cash selling price of the...
-
The Production Department of Hruska Corporation has submitted the following forecast of units to be produced by quarter for the upcoming fiscal year: Units to be produced 1st Quarter 2nd Quarter 3rd...
-
You go to the hardware store to buy a new 50 ft garden hose. You find you can choose between hoses of inch and inch inner diameter. Compare the rate at which water flows through the two types of...
-
Miller Company's contribution format income statement for the most recent month is shown below: Sales (32,000 units) Variable expenses Total $ 224,000 128,000 Contribution margin 96,000 Per Unit $...
Study smarter with the SolutionInn App