If an accounting change, identify the type of change.2. Identify whether it represents an accounting change or an error. Actual payment experience of recent years indicates that 0.75% is a better indication of the actual cost. Warranty expense is determined each year as 1% of sales. On January 1, 2018, the company changed to the straight-line method.g. The machine has been depreciated by the double-declining balance method. Its useful life was estimated to be 10 years with no salvage value. At the beginning of 2016, the company purchased a machine at a cost of $720,000. The expense was recorded when the commissions were paid in early 2018.f. At the end of 2017, the company failed to accrue $15,500 of sales commissions earned by employees during 2017. The change will cause a $960,000 increase in the beginning inventory at January 1, 2019.e. The company changed inventory cost methods to FIFO from LIFO at the end of 2018 for both financial statement and income tax purposes. On December 31, 2017, merchandise inventory was overstated by $25,000 due to a mistake in the physical inventory count using the periodic inventory system.d. Declining real estate values in the area indicate that the salvage value will be no more than $25,000.c. The building cost $600,000 on December 29, 2007, and has been depreciated on a straight-line basis assuming a useful life of 40 years and a salvage value of $100,000. Effective January 1, 2018, the company changed the salvage value used in calculating depreciation for its office building.
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The full amount was debited to insurance expense at the time.b. A five-year casualty insurance policy was purchased at the beginning of 2016 for $35,000. The audit occurred during 2018 before any adjusting entries or closing entries were prepared.a. As part of an internal audit, the following facts were discovered. In 2018, the company was acquired by one of its major customers. is a manufacturer of high-tech industrial parts that was started in 2006 by two talented engineers with little business training. This problem has been solved: Solutions for Chapter 20 Problem 12P: Williams-Santana Inc.
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