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Explain Whether Each of the Following Transactions Would Be Accounted

question 7

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Explain whether each of the following transactions would be accounted for as a change in accounting policy, change in accounting estimate or as an error correction. Assume that the entity reports its financial results in accordance with ASPE and all transactions are material.
 Transaction  Appropriate accounting  During the audit of the 2021 fiscal year,  the auditors learned that Soorya Mining  Inc. should have had used an average  price of $850/0z. for its fiscal 2021 reporting, not $840/0z During the audit of the 2021 fiscal year,  the auditors learned that Everlast  Construction used the cost recovery  method to account for its long-term  contracts as it could not reasonable  estimate the outcome of its performance  obligations. Everlast has since improved  its estimating capabilities and has  adopted the percentage of completion  method.  During the audit of the 2021 fiscal year,  the auditors learned that Everlast  Construction previously used the  completed contract method. During the  year Everlast adopted the percentage of  completion method. \begin{array} {| l | l | } \hline \text { Transaction } & \text { Appropriate accounting } \\\hline \text { During the audit of the } 2021 \text { fiscal year, } \\\text { the auditors learned that Soorya Mining } \\\text { Inc. should have had used an average } \\\text { price of } \$ 850 / 0 z \text {. for its fiscal } 2021 \\\text { reporting, not } \$ 840 / 0 z \text {. } & \\\hline \text { During the audit of the } 2021 \text { fiscal year, } \\\text { the auditors learned that Everlast } \\\text { Construction used the cost recovery } \\\text { method to account for its long-term } \\\text { contracts as it could not reasonable } \\\text { estimate the outcome of its performance } \\\text { obligations. Everlast has since improved } \\\text { its estimating capabilities and has } \\\text { adopted the percentage of completion } \\\text { method. } \\\begin{array} { l } \hline \text { During the audit of the } 2021 \text { fiscal year, } \\\text { the auditors learned that Everlast } \\\text { Construction previously used the } \\\text { completed contract method. During the } \\\text { year Everlast adopted the percentage of } \\\text { completion method. }\end{array} \\\hline\end{array}


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