dentification and Effects of Changes and Errors

The following are independent events: Required:

1. Indicate what type of accounting change or error, if any, is represented by each of the preceding items and the method of accounting (retrospective adjustment, prospective, or prior period adjustment) for the item in the financial statements of the current year. If any statement has no accounting change, select "This is not an accounting change".

1. Changed from the LIFO to the FIFO inventory cost flow assumption.
2. Reduced remaining service life of machinery from 10 to 8 years.
3. Changed from an accelerated method to the straight-line method of depreciating assets.
4. Wrote-down inventories because of obsolescence.
5. Received damages won in a court suit instigated 5 years ago.
6. Discovered that costs were recorded as an expense in a previous period but should have been recorded as an item of property, plant, and equipment.
7. Wrote down property, plant, and equipment because of closure of inefficient plants.
8. Changed from the successful-efforts method to the full-cost accounting method for oil exploration costs.

   

a. Changed from the LIFO to the FIFO inventory cost flow assumption. Change in accounting principle Prior period adjustment (restatement) b. Reduced remaining service life of machinery from 10 to 8 years. C. Changed from an acceler Prior period adjustment (restatement) of depreciating assets. Prospective method d. Wrote-down inventories Retrospective adjustment method This is not an accounting change e. Received damages won in a court suit instigated 5 years ago. f. Discovered that costs were recorded as an expense in a previous period but should have been recorded as an item of property, plant, and equipment. a. Changed from the LIFO to the FIFO inventory cost flow assumption. Change in accounting principle Prior period adjustment (restatement) b. Reduced remaining service life of machinery from 10 to 8 years. Change in accounting estimate A method to the straight-line method of depreciating assets. Change in accounting principle Correction of accounting error ause of obsolescence. This is not an accounting change e. Received damages won in a court suit instigated 5 years ago. f. Discovered that costs were recorded as an expense in a previous period but should have been recorded as an item of property, plant, and equipment. a. Changed from the LIFO to the FIFO inventory cost flow assumption. Change in accounting principle Prior period adjustment (restatement) b. Reduced remaining service life of machinery from 10 to 8 years. C. Changed from an acceler Prior period adjustment (restatement) of depreciating assets. Prospective method d. Wrote-down inventories Retrospective adjustment method This is not an accounting change e. Received damages won in a court suit instigated 5 years ago. f. Discovered that costs were recorded as an expense in a previous period but should have been recorded as an item of property, plant, and equipment. a. Changed from the LIFO to the FIFO inventory cost flow assumption. Change in accounting principle Prior period adjustment (restatement) b. Reduced remaining service life of machinery from 10 to 8 years. Change in accounting estimate A method to the straight-line method of depreciating assets. Change in accounting principle Correction of accounting error ause of obsolescence. This is not an accounting change e. Received damages won in a court suit instigated 5 years ago. f. Discovered that costs were recorded as an expense in a previous period but should have been recorded as an item of property, plant, and equipment