Identify the type of accounting change that is described in each item, and indicate whether the prior years' financlal statements must be restated when presented in comparative form with the current vear's financial statements. Assume ASPE is followed. 4. A change from including the employer share of Canada Pension Plan and Employment insurance premiums as a separate payroll tax expense to including them with salaries and wages expense on the income statement 5. The correction of a mathematical error in inventory costing that was made in a prior period 6. A change from the straightline to the double-decliningbalance method of depreclation in recognition of the effect that technology has on the pattern of benefits recelved from the asset's use 7. Achange from presenting unconsolidated financial statements (using the cost method for subsidiaries) to presenting consolidated financial statements for the company and its two long: heid subsidiarles 8. A change in the method of accounting for inventory for tax purposes to conform to the method of accounting for inventory for financial accounting purposes; as a result, both future and current taxes payable changed substantially 9. Achange from the periodic inventory method to the perpetual inventory method with the introduction of scanning equipment and updated computer software (FIFO used) 10. A change in an accounting method due to a change in a primary source of GAAP Save for Later Attempts: 0 of 2 used gibert Answer The first audit of the books of Carla Vista Limited was recently carried out for the vear ended December 31. 2023. Carla Vista follows IFRS, In examining the books, the auditor found that certain items had been overboled or micht have been incorrectly handled in the past: 1. At the beginning of 2021 , the company purchased a machine for $453,000 (residal value of $30,300 ) that had a useful life of 6 years. The bookkeeper used straight-line depreciation, but failed to deduct the residual value in calculating the depreclation base for the three years. 2. At the end of 2022 , the company accrued sales salaries of $1.500 in excess of the correct anount. 3. A tax lawsuit related to the year 2021 was settled late in 2023 . It was determined that the company owed an additional $89,000 in tax related to 2021 . The compary did not record a liability in 2021 or 2022 , because the possibility of losing was considered remote. The company charged the $83,000 to retained earnings in 2023 as a correction of a prior year's error. 4. Carfa Vista purchased another company early in 2019 and recorded goodwill of 5508,000 . Carfa Vista amortized 525,400 of goodwill in 2019 , and $50,800 in each subsequent year. The tax treatment for goodwill was properfy applied. 5. In 2023, the company changed its basis of inventary costing from FIFO to welghted average cost. The changeis cumulative effect was to decrease net income of prior years by $52,000. The company debited this curnulative effect to Retained Earnirgs, and recorded the related income tax effect. The weighted average cost formula was used in calculating income for 2023 . 6. In 2023 , the company wrote off $67,000 of inventory that it discovered, in 2023 , has beenstolen from one of its warehouses in 2022. This loss was charged to the Loss on impairment account in 2023. (a) Prepare the journal entries in 2023 to correct the books where necessary, assuming that the 2023 books have not been closed. Assume that the change from FIFO to weighted average cost can be justifed as resulting in more relevant financial information. Disregard the effects of the corrections on income tax, (thit all debit entries before credf entries Credif occount tities are dutomaticalfy the amounts.)
