Creighton, Inc

question 43

Multiple Choice

Creighton, Inc.determined that it had incorrectly estimated both the useful life and the estimated residual value of equipment which it purchased 2 years ago.When accounting for the change in its accounting estimates, Creighton must

• A) correct the financial statements of prior years affected by the errors in the estimates.
• B) determine the book value at the point of change and depreciate that amount over the remaining useful life.
• C) add the amount of the error to the amount of the current year's depreciation expense.
• D) determine the effect of the error and report it as a loss on the income statement in Other Revenues and Expenses.

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Definitions:

Burden of Proof

The burden of proof is the obligation of a party in a legal case to prove their claims or allegations are true with sufficient evidence.

Intentional Torts

Legal wrongs resulting from deliberate actions rather than accidents, often leading to civil lawsuits for damages.

Punitive Damages

Monetary compensation awarded to a plaintiff, over and above actual damages, to punish the defendant for egregious behavior and deter future similar acts.

Compensatory Damages

Financial awards to a plaintiff to compensate for proven harm, loss, or injury caused by the defendant.