For 2012, P Co

question 71

Multiple Choice

For 2012, P Co. estimated its two-year equipment warranty costs based on $23 per unit sold in 2012. Experience during 2013 indicated that the estimate should have been based on $25 per unit. The effect of this $2 difference from the estimate is reported:

• A)In 2013 income from continuing operations.
• B)As an accounting change, net of tax, below 2013 income from continuing operations.
• C)As an accounting change requiring 2012 financial statements to be restated.
• D)As a correction of an error requiring 2012 financial statements to be restateD.The change in the estimate for warranty costs is based on new information obtained from experience and qualifies as a change in accounting estimate.A change in accounting estimate affects current and future periods and is not accounted for by restating prior periods.The accounting change is a part of continuing operations but is not reported net of taxes.

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Definitions:

Union Election

A formal voting process where workers decide whether to establish a labor union to represent them in negotiations with management.

Voter Turnout

The percentage of eligible voters who cast a ballot in an election, regarded as a measure of citizens' engagement and participation in the electoral process.

Governmental Representation

The system through which citizens elect officials to enact and enforce laws on their behalf within a government.

Third Party

An entity involved in a situation or agreement (such as mediation or arbitration) that is neither of the two primary parties involved.