The following are various types of accounting changes 1 Change in a plant asset's residual value 2 Change due to an overstatement of inventory (in the preceding period) 3 Change from sum of the years' digits to straight line method of depreciation because of a change in the pattern of benefits received 4 Change in a primary source of GAAP 5 Decision by management to capitalize interest The company is reporting a self constructed asset for the first time 6 Change in the rate used to calculate warranty costs 7 Change from an unacceptable accounting policy to an acceptable accounting policy 8 Change in a patent's amortization period 9 Change from the zero profit method to the percentage of completion method on construction contracts This change was a result of experience with the project and improved ability to estimate the costs to completion and therefore the percentage complete 10 Recognition of additional income tax owing from three years ago as a result of improper calculations by the accountant, who was not familiar with income tax legislation and income tax returns Required a (10 marks) For each change or error, use the following code letters to indicate how it would be accounted for assuming the company follows IFRS Accounted for in the current year only (CY) Accounted for prospectively (P) Accounted for retrospectively (R) None of the above, or unable to determine Explain (NA) b (10 marks) Identify the type of change for each of the situations in items 1 to 10 Change in estimate Change in policy Accounting error correction New policy Hint Provide a table with your solutions Accounting Changes How to Account for the change (CY, P, R, N A) Type of change (change in estimate, policy, acct error correction, new policy) c (5 marks) Now assume that the company follows ASPE Identify the situations in part (a) that would be accounted for differently under ASPE than IFRS

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The following are various types of accounting changes: 1. Change in a plant asset's residual value 2. Change due to an overstatement of

The following are various types of accounting changes:

______ 1. Change in a plant asset's residual value
______ 2. Change due to an overstatement of inventory (in the preceding period)
______ 3. Change from sum-of-the-years'-digits to straight-line method of depreciation because of a change in the pattern of benefits received
______ 4. Change in a primary source of GAAP
______ 5. Decision by management to capitalize interest. The company is reporting a self-constructed asset for the first time.
______ 6. Change in the rate used to calculate warranty costs
______ 7. Change from an unacceptable accounting policy to an acceptable accounting policy
______ 8. Change in a patent's amortization period
______ 9. Change from the zero-profit method to the percentage-of-completion method on construction contracts. This change was a result of experience with the project and improved ability to estimate the costs to completion and therefore the percentage complete.
______ 10. Recognition of additional income tax owing from three years ago as a result of improper calculations by the accountant, who was not familiar with income tax legislation and income tax returns

Required:

a. (10 marks) For each change or error, use the following code letters to indicate how it would be accounted for assuming the company follows IFRS:

Accounted for in the current year only (CY)
Accounted for prospectively (P)
Accounted for retrospectively (R)
None of the above, or unable to determine. Explain. (NA)

b. (10 marks) Identify the type of change for each of the situations in items 1 to 10.

Change in estimate
Change in policy
Accounting error correction
New policy

Hint: Provide a table with your solutions

Accounting Changes

How to Account for the change (CY, P, R, N/A)

Type of change (change in estimate, policy, acct error correction, new policy)

c. (5 marks) Now assume that the company follows ASPE. Identify the situations in part (a) that would be accounted for differently under ASPE than IFRS.