Indicate the Nature of Each of the Situations Described Below

question 32

Essay

Indicate the nature of each of the situations described below using the following three-letter code.
CODE DESCRIPTION
CPR: Change in principle reported retrospectively
CPP: Change in principle reported prospectively
CES: Change in estimate
CRE: Change in reporting entity
PPA: Prior period adjustment required
_____ Technological advance that renders worthless a patent with an unamortized cost of $45,000.
_____ Change from LIFO inventory costing to average inventory costing.
_____ Including in the consolidated financial statements a subsidiary acquired several years earlier that was appropriately not included in previous years.
_____ Change from FIFO inventory method to LIFO.
_____ Pension plan assets for a defined benefit pension plan achieving a rate of return in excess of the amount anticipated.
_____ Change from the pay-as-you-go method to estimating warranty expense in the period the related product is sold.
_____ Change from declining balance depreciation to straight-line.
_____ Change from determining lower of cost or net realizable value for inventories by the individual item approach to the aggregate approach.
_____ Settling a lawsuit for less than the amount accrued previously as a loss contingency.
_____ Change in the estimated useful life of office equipment.

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Definitions:

Butchers

Professionals specialized in cutting, trimming, and preparing meat for sale or consumption.

Manufacturing Defects

Flaws in a product resulting from the manufacturing process that make it dangerous or unfit for its intended use.

Arbitration

A process for the settlement of disputes whereby an impartial third party or board hears the dispute, then makes a decision that is binding on the parties. Most commonly used to determine grievances arising out of a collective agreement, or in contract disputes.

Automobiles

Motor vehicles with four wheels designed primarily for passenger transportation on public roads.