Masia Corp (MC) is a small private company that elects to report its financial results in accordance with IFRS MC has a retail division and a contracting division MCs auditors are presently reviewing the draft December 31, 2020, financial statements and have discussed the following issues with MCs accountant MCs building has historically been depreciated using a declining balance method Its accountant and auditors agree that the straight line method is now a more appropriate method to use A depreciation provision of $300,000 has already been made for the year ended December 31, 2020 Historically, MC did NOT value ending inventory at the lower of cost or net realizable value Upon review, the inventory balance at December 31, 2019, should have been reduced by $82,000 The closing inventory for December 31, 2020, should be written down an additional $37,000 MC has NOT yet made any adjustments for this writedown The retail division of MC provides a one year warranty on the goods it sells MC expenses warranty claims when paid In 2020, MC expensed $200,000 in warranty claims, of which $39,000 pertained to goods sold in 2019 MCs contracting division has historically used the completed contract method for revenue recognition MCs accountant now believes that the percentage of completion method would provide more relevant information to the financial statement users Income under the completed contract method for the years ended December 31, 2019 and 2020, respectively, was $1,100,000 and $1,400,000 If the percentage of completion method had been used, MCs income would have been $1,050,000 in 2019 and $1,650,000 in 2020 MC wrote off a $25,000 account receivable in June 2020 when a large customer declared bankruptcy The amount was outstanding at the end of 2019 but had NOT been considered when determining the allowance for doubtful accounts at the end of 2019, because there was NO indication that the customer was in financial difficulty MCs accountant is concerned that the 2019 financial statements may need to be adjusted for this oversight All amounts discussed above are material (significant) for MC Required For each issue described above, specify whether it is an error, a change in accounting policy, or a change in estimate Indicate the nature of the required adjustment, if any (retrospective, prospective, or no adjustment required)

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Masia Corp. (MC) is a small private company that elects to report its financial results in accordance with IFRS. MC has a retail division and

Masia Corp. (MC) is a small private company that elects to report its financial results in accordance with IFRS. MC has a retail division and a contracting division. MCs auditors are presently reviewing the draft December 31, 2020, financial statements and have discussed the following issues with MCs accountant:

MCs building has historically been depreciated using a declining-balance method. Its accountant and auditors agree that the straight-line method is now a more appropriate method to use. A depreciation provision of $300,000 has already been made for the year ended December 31, 2020.
Historically, MC did NOT value ending inventory at the lower of cost or net realizable value. Upon review, the inventory balance at December 31, 2019, should have been reduced by $82,000. The closing inventory for December 31, 2020, should be written down an additional $37,000. MC has NOT yet made any adjustments for this writedown.
The retail division of MC provides a one-year warranty on the goods it sells. MC expenses warranty claims when paid. In 2020, MC expensed $200,000 in warranty claims, of which $39,000 pertained to goods sold in 2019.
MCs contracting division has historically used the completed contract method for revenue recognition. MCs accountant now believes that the percentage of completion method would provide more relevant information to the financial statement users. Income under the completed contract method for the years ended December 31, 2019 and 2020, respectively, was $1,100,000 and $1,400,000. If the percentage of completion method had been used, MCs income would have been

$1,050,000 in 2019 and $1,650,000 in 2020.

MC wrote off a $25,000 account receivable in June 2020 when a large customer declared bankruptcy. The amount was outstanding at the end of 2019 but had NOT been considered when determining the allowance for doubtful accounts at the end of 2019, because there was NO indication that the customer was in financial difficulty. MCs accountant is concerned that the 2019 financial statements may need to be adjusted for this oversight.

All amounts discussed above are material (significant) for MC.

Required:

For each issue described above, specify whether it is an error, a change in accounting policy, or a change in estimate. Indicate the nature of the required adjustment, if any (retrospective, prospective, or no adjustment required).