can someone help me parse out how to read this question— I answered zero because I thought the depreciation would be prospective so no adjustment they would just recognize the new amount this year- and that the error adjustment would be made to the 2001 statement not the 2002 / current statement because errors are retrospective…. according to the answer explanation this is all correct however somehow I was suppose to know that only a 2002 statement was presented???? What am I missing or doing wrong? Thanks!
Foy Corp. failed to accrue warranty costs of $50,000 in its December 31, 20X1, financial statements. In addition, a change from straight-line to accelerated depreciation made at the beginning of 20X2 resulted in a cumulative effect of $30,000 on Foy's retained earnings. Both the $50,000 and the $30,000 are net of related income taxes. What amount should Foy report as prior period adjustments in 20X2?
A. $0
B. $30,000
C. $50,000
D. $80,000
Correct Answer C- FASB ASC 250-10-45-22 notes, “Any error in the financial statements of a prior period discovered after the financial statements are issued or are available to be issued (as discussed in Section 855-10-25) shall be reported as an error correction, by restating the prior-period financial statements.”
Foy Corp.'s failure to accrue $50,000 of warranty cost in 20X1 is an error which should be reported in 20X2 as a prior period adjustment. (The change in depreciation is a change in accounting principle, shown on the income statement.)
and they ask me why I drink...
FAR- 61-next time I'll ask for lube instead of a calculator
REG-75- Never been so happy to see such a low grade
BEC- 8/11
AUD- 9/2
.