Case A: The company capitalized costs to inventory that should not have been. As a result,...

 

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Case A: The company capitalized costs to inventory that should not have been. As a result, the selling cost of inventory is now lower than the recorded cost. Case B: The selling cost of inventory has declined. The selling price is now lower than the amount capitalized in the inventory account Case C: The company used the FIFO method to account for inventory, but, after review of their competitors, determined that average cost is the standard and a change is made. Case D: The company has made a mandatory change to how it accounts for certain assets, due to amendments to the accounting standard. Case E: The company has begun using data analytics to understand sales patterns and customer returns. As a result of the analysis, the company believes it has recognized too high of a provision for returns over the past 2 years, and the liability is now overstated. Required: Identify whether this is a change in accounting policy, estimate or an error. Determine whether retrospective or prospective treatment is required. Case A Case B Case C Case D Case E Change in estimate, accounting error or change in policy? Prospective or retrospective application? Case A: The company capitalized costs to inventory that should not have been. As a result, the selling cost of inventory is now lower than the recorded cost. Case B: The selling cost of inventory has declined. The selling price is now lower than the amount capitalized in the inventory account Case C: The company used the FIFO method to account for inventory, but, after review of their competitors, determined that average cost is the standard and a change is made. Case D: The company has made a mandatory change to how it accounts for certain assets, due to amendments to the accounting standard. Case E: The company has begun using data analytics to understand sales patterns and customer returns. As a result of the analysis, the company believes it has recognized too high of a provision for returns over the past 2 years, and the liability is now overstated. Required: Identify whether this is a change in accounting policy, estimate or an error. Determine whether retrospective or prospective treatment is required. Case A Case B Case C Case D Case E Change in estimate, accounting error or change in policy? Prospective or retrospective application?

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Case A Nature Change in accounting error Reasoning Capitalizing costs to inventory that should not h... View the full answer