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sashaice [31]
3 years ago
15

How do you determine if a change in principle should be reported retroactively, currently, or prospectively?

Business
1 answer:
Pepsi [2]3 years ago
5 0
<span>A cumulative-effect type change (current) in accounting principle can be reported by using current method. The prior period financial statements that are included for comparison cannot be restated. Considering the extraordinary items and net income on the income statement, the increasing effect of accounting change have to be reported.If there are Pro forma amounts in any period must be published as supplemental information.

Retroactive method is used to report any retroactive-effect type change in accounting principle. The company evaluates the cumulative effect of implementing any new method on financial statement in the beginning of the year. This new accounting principle is used to restate the pior period financial statements. If the cumulative effect is significant than the periods shown in the financial statements, the beginning retained earnings of the prior year being presented would be adjusted.

LIFO (last-in, first-out) method of inventory is reported using the prospective method<span>.The starting inventory amount for a particular year the change is adopted is identified as the base-year inventory for the future. Restating the prior periods’ income is not practical in prospective method. Any change to the Last In First Out method of inventory valuation need to be disclosed by the company.</span></span>
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Fogerty Company makes two products, titanium Hubs and Sprockets. Data regarding the two products follow:
Oliga [24]

Answer:

                          Hubs Sprockets

Direct Materials   29            17

Direct Labor        13.3            5.7

Overhead            14.65          0.24

Unit Cost              56.95       22.94

Explanation:

<u><em>Labor:</em></u>

Hubs: 0.7 hours per unitx 19 labor rate = $13.3

Sprockets 0.3 x 19 = $5.7

<u><em>Direct Materials:</em></u>

Hubs $29

Sprockets $17

<u><em>Overhead rate</em></u>

Activity                         Pool   Hub          Sprockets

Machine Setups            225   125(55.56%) 100(44.44%)

Special processing 3900 3900    

<u>Machine Setups</u>

27,000 x 55.56% /13,000 units:  $   1.1538  

27,000 x 44.44% / 50,000 units  $  0.24

<u>Special Processing</u>

175,500/13,000 = $13.5

Total overhead

sprockets: $0.24

hubs: $14.65

Units cost:

hubs: 13.3  + 29 + 14.65 = 56.95

sprockets: 5.7 + 17 + 0.24 = 22.94

6 0
3 years ago
A mutual fund with beta of 0.8 has an expected rate of return of 14%. If the risk-free rate is 5% and you expect the rate of ret
Nikitich [7]

Answer:

1%

Explanation:

Portfolio's alpha = expected return of the portfolio - required return of the portfolio

Alpha = 14% - (5% + (0.8 x 10%)) = 14% - (5% + 8%) = 1%

A portfolio's alpha is the excess return yielded by the portfolio compared to the market's expected return for a similar investment.

5 0
3 years ago
Which level of government is currently “in charge” of planning controls for california property?
stira [4]

The level of the government that is the one in charge with the planning controls are the state housing law because this is considered to be a uniformed law in which all of the cities should follow and adopt for this has been made and established.

6 0
3 years ago
Lauren makes $150 a day as a bank clerk. she takes two days off work without pay to fly to another city to attend the concert of
Juli2301 [7.4K]
The two days Lauren doesn't receive pay would be $150 × 2 = $300
Add on the cost of transportation & lodging: $300 + $250 = $550
Finally, add the cost of the concert ticket: $550 + $50 = $600

The opportunity cost of Lauren's decision to attend the concert is $600.
8 0
3 years ago
Which of the following statements is most true of order-getting salespeople?
melisa1 [442]

Answer:they seek out possible buyers and sue an organized creative approach to present messages

Explanation:

3 0
3 years ago
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