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Question 1: Accounting Changes and Error Corrections (10 marks) Prior to the books being closed for the 2021 year, the auditor discovered the following items

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Question 1: Accounting Changes and Error Corrections (10 marks) Prior to the books being closed for the 2021 year, the auditor discovered the following items from the books of Eastern Paris Textiles Ltd.: (a) The depreciation was incorrectly calculated in 2020 for buildings, which understated income in that year. Amount by which income was understated for the 2020 year $ 42,852 (b) At the beginning of 2021, the company decided to change from the taxes payable method to the future income tax method of accounting for corporate taxes. Management determined that this change will have the effect of increasing the future tax liability account. Amount of increase in future income tax liability as of January 1, 2021 $ 24,191 (c) In early July 2019, the company purchased a patent. At the time of purchase, management prepared estimates of the patent's residual value and useful life. In early January 2021, the estimated useful life (from the date of purchase) was modified to 8 years. The estimated residual value of the patent did not change Purchase price of patent $ 39,448 Estimated useful life of patent on the date of purchase (in years) 12 Estimated residual value of patent on the date of purchase (d) At the end of the 2020 year, the bookkeeper recorded the Journal entry for accrued wages twice. Ata result, wages were overstated for the 2020 year. Amount by which wages were overstated in 2020 15,206 Assume that the company has a December 31 year end and follows ASPE. Required: 1. For each of the above items indicate whether it is a change in accounting estimate, a change in accounting policy, or a correction of error. (2 marks) 2. Assume that the books are closed for all years other than 2021. Prepare any journal entries required to account for the effect of each of the above items on years prior to 2021. if you think no entry is required, write "none" (4 marks) 3. For part (e), calculate amortization expense for the 2021 year on the patent purchased in 2019. (4

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