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Chapter 22: Q2ISTQ. (page 1328)

Which of the following is not classified as an accounting change by IFRS?

(a) Change in accounting policy.

(b) Change in accounting estimate.

(c) Errors in financial statements.

(d) None of the above

Short Answer

Expert verified

The correct answer is option C, as accounting error is not classified as the accounting change in IFRS

Step by step solution

01

Correct Answer

The correct answer is for this question is Option C.

02

Explanation

A change in accounting error in the financial statement is not classified as an accounting change. The IFRS considers the accounting change as the only change in accounting policy and change in accounting estimates

03

Explanation of the incorrect options

The Change in accounting policy and the change in accounting estimate is considered or classified as accounting change.

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Most popular questions from this chapter

Discuss how a change to the LIFO method of inventory valuation is handled when it is impracticable to determine previous LIFO inventory amounts.

Discuss briefly the three approaches that have been suggested for reporting changes in accounting principles.

Oliver Corporation has owned stock of Conrad Corporation since 2014. At December 31, 2017, its balances related to this investment were:

Equity Investments \(185,000

Fair Value Adjustment (AFS) 34,000 Dr.

Accumulated Unrealized Holding Gain or Loss鈥擨ncome (recorded in Retained Earnings) 34,000 Cr.

On January 1, 2018, Oliver purchased additional stock of Conrad Company for \)475,000 and now has significant influence over Conrad. If the equity method had been used in 2014鈥�2017, Oliver鈥檚 share of income would have been $33,000 greater than dividends received. Prepare Oliver鈥檚 journal entries to record the purchase of the investment and the change to the equity method.

You have been engaged to review the financial statements of Gottschalk Corporation. In the course of your examination, you conclude that the bookkeeper hired during the current year is not doing a good job. You notice a number of irregularities as follows.

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Instructions Prepare the necessary correcting entries, assuming that Gottschalk uses a calendar-year basis.

(Change from Fair Value to Equity) On January 1, 2017, Beyonce Co. purchased 25,000 shares (a 10% interest) in Elton John Corp. for \(1,400,000.

At the time, the book value and the fair value of John鈥檚 net assets were \)13,000,000. On July 1, 2018, Beyonce paid \(3,040,000 for 50,000 additional shares of John common stock, which represented a 20% investment in John. The fair value of John鈥檚 identifiable assets net of liabilities was equal to their carrying amount of \)14,200,000. As a result of this transaction, Beyonce owns 30% of John and can exercise significant influence over John鈥檚 operating and financial policies.

John reported the following net income and declared and paid the following dividends.

Net Income Dividend per Share

Year ended 12/31/17 \(700,000 None

Six months ended 6/30/18 500,000 None

Six months ended 12/31/18 815,000 \)1.55

Instructions

(Any excess fair value is attributed to goodwill.) Determine the ending balance that Beyonce Co. should report as its investment in John Corp. at the end of 2018
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