10. Because of a decline in market price in the second quarter, a company incurred an inventory loss. The market price is expected to return to previous levels by the end of the year. At the end of the year, the decline had not reversed itself. When should the loss be reported in the company's interim income statements? (a) In the fourth quarter only. (b) Evenly over the second, third, and fourth quarters. (c) In the second quarter only. (d) Evenly over the third and fourth quarters. 11. For interim financial reporting, an extraordinary gain occurring in the second quarter should be: (a) Recognized evenly over the last three quarters. (b) Recognized evenly over all four quarters, with the first quarter being (c) (d) restated. Recognized in the second quarter. Disclosed by footnote only in the second quarter. How should the effect of a change in accounting estimate be accounted for? (a) 12. By restating amounts reported in financial statements of prior periods. (b) (c) (d) By reporting pro forma amounts for prior periods. As a prior period adjustment to beginning retained earnings. In the period of change and future periods if the change affects both. 13. On January 1, 20X0, a company purchased a machine for $600,000 and depreciated it by the straight line method using an estimated useful life of six years with no residual value. On January 1, 20X3, the company determined that the machine had a useful life of only five years from the date of acquisition and will have a residual value of $50,000. An accounting change was made in 20X3 to reflect these changes. What should be the balance in accumulated depreciation for this machine at December 31, 20X3? (a) $440,000. (b) $425,000. (c) $480,000. (d) $400,000