WQ1. Explain whether each of the following would be treated as a change in accounting policy, change in accounting estimate or error or none of these. You need to give reasons for your answers. i. The useful life of machinery is now assessed as 8 years (previously estimated at 5 years) i. It is now expected that at the end of its useful life, the machinery (in i above) will have no disposal value. It was previously expected to realise $10,000 on disposal. ii. The company has previously only sold goods on a cash basis and hence no doubtful debts expense was recorded. In this period the company allowed sales on a credit basis and has recognised a doubtful debts expense of 1% of credit sales. The company has previously calculated its warranty provision as .05% of sales. However it has now been discovered that there was a problem with quality control in the previous period. It is now expected that claims for warrantees relating to sales from the previous period will increase to 1% of sales for that period. It has been discovered that a sale to a customer in the previous period was incorrectly recorded at $2942 instead of $2429 iv. 0 v. WQ2. Application and analysis exercise 18.4 in Chapter 18 of the text In addition, classify the event below. (e) A company is being sued. The company had previously recognised a liability and had estimated that the damages awarded would be $5m. In late July the courts awarded damages of $47m. The company cannot afford to pay this amount and it is now expected to place itself into voluntary liquidation. r. 3