22 Accounting Changes and Error Analysis 22-1 Accounting Changes and Error Analysis Accounting Changes Error Analysis Changes in accounting policy Changes in accounting estimate Balance sheet errors Income statement errors Balance sheet and income statement effects Change in reporting entity Correction of errors Summary Motivations for change of method 22-2 Comprehensive example Preparation of statements with error corrections Changes in Accounting Principle
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Module 6 Reporting and Analyzing Operating Assets QUESTIONS Q6-1. When a company increases its allowance for uncollectible accounts‚ it also records bad debt expense in the income statement. If a company overestimates the allowance account‚ bad debt expense is too high and net income is understated. As well‚ accounts receivable (net of the allowance account) and total assets are both understated on the balance sheet. In future periods‚ the company will not need to add as much to its allowance
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June 2011 Depreciation Expense Accumulated Depreciation (Record depn @ 800‚000/4 useful life) 200‚000 30 June 2011 Accumulated Depreciation Part A 200‚000 Part A Revaluation Increment (Gain) (Revalue Part A to $690‚000) 200‚000 200‚000 90‚000 90‚000 1 July 2010 Part B Cash (Purchase of Part B) 500‚000 500‚000 30 June 2011 Depreciation Expense 100‚000 Accumulated Depreciation (Record depn @ 500‚000/5 useful life) 30 June 2011 Accumulated Depreciation Part B
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Financial Statement: A Summary report which quantitatively describes the financial health of a company Purpose of financial Statement: The objective of financial statements is to provide information about the financial position‚ performance and changes in financial position of an enterprise to the shareholders and lenders. it is useful to a wide range of users in making economic decisions. Components of Financial Statement: Profit & Loss Statement / Income Statement Retained earnings
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The factory overhead budget for the year was budgeted at $481‚798 less $150‚000 depreciation. Total depreciation over the last three years has remained at $130‚000 per year for the past three years as identified on the company’s balance sheets. Therefore setting depreciation at $150‚000 for the 9th year is too high without identifying any new major purchases that would add to this depreciation. Even though depreciation is not actual cash flow it does define the reduction of company assets and should
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represents the total of the plant‚ property‚ and equipment that Palfinger has. This number should be recorded as the historical cost that the plant‚ property and equipment was purchased at. This total number also has the total sum of amortized depreciation subtracted out to get the net amount of PP&E that is put on the balance sheet c.) In the notes to the financial statements‚ Palfinger reports the plant‚ property and equipment of the following: • Land and equipment • Undeveloped
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Corporate Finance Case 1 1. To calculate the present value of future cash flow in 2013‚ we first calculate the free cash flow between 2014-2020: Table 1: Free cash flow of 2014-2020 (in $million) After-tax profits Depreciation Gross investment in fixed assets Investment in net working capital Free cash flow 2014 2015 2016 2017 2018 2019 2020 5.25 2.40 5.70 3.10 3.00 3.12 3.40 3.17 4.35 3.26 6.00 3.44 7.60 3.68 (4.26) (10.50) (3.34) (3.65) (4.18) (5.37) (6.28) (1.39) (0.60)
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Danielle Company purchased equipment and incurred the following costs. 2. Depreciation is a process of: 3. Micah Bartlett Company purchased equipment on January 1‚ 2010‚ at a total invoice cost of $400‚000. The equipment has an estimated salvage value of $10‚000 and an estimated useful life of 5 years. The amount of accumulated depreciation at December 31‚ 2011‚ if the straight-line method of depreciation is used‚ is: 4. Ann Torbert purchased a truck for $11‚000 on January 1
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CONFIDENTIAL AC/SEP 2011/AIS280/CAC230 UNIVERSITI TEKNOLOGI MARA FINAL EXAMINATION COURSE COURSE CODE EXAMINATION TIME COMPUTERIZED ACCOUNTING/ COMPUTERISED ACCOUNTING AIS280/CAC230 SEPTEMBER 2011 3 HOURS INSTRUCTIONS TO CANDIDATES 1. This question paper consists of four (4) parts : PART A (20 Questions) PART B (3 Questions) PART C (3 Questions) PART D (2 Questions) 2. Answer ALL questions from all four (4) parts : i) Answer PART A in the Objective Answer Sheet. ii) Answer PART B‚ C and D in the
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A Guide to Earnings and Financial Reporting Quality A Guide to Earnings and Financial Reporting Quality Quality of reported financial information is a critical element in evaluating financial statement data. The higher the quality of financial reporting‚ the more useful the information is for business decision making. 5-2 A Guide to Earnings and Financial Reporting Quality There are a number of areas on the earnings statement that provide management with opportunities for influencing the
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