Questions from Intermediate Accounting

Q: Describe the process of correcting an error when it’s discovered in a

Describe the process of correcting an error when it’s discovered in a subsequent reporting period.

Q: If merchandise inventory is understated at the end of 2020, and

If merchandise inventory is understated at the end of 2020, and the error is not discovered, how will net income be affected in 2021?

Q: Sugarbaker Designs Inc. changed from the FIFO inventory costing method to

Sugarbaker Designs Inc. changed from the FIFO inventory costing method to the average cost method during 2021. Which items from the 2020 financial statements should be restated on the basis of the ave...

Q: Southeast Steel, Inc., changed from the FIFO inventory costing method

Southeast Steel, Inc., changed from the FIFO inventory costing method to the LIFO method during 2020. How would this change likely be reported in the 2021 comparative financial statements?

Q: The issuance of stock and the issuance of bonds are reported as

The issuance of stock and the issuance of bonds are reported as financing activities. Are payments of dividends to shareholders and payments of interest to bondholders also reported as financing activ...

Q: One of the advantages of leasing rather than purchasing an asset is

One of the advantages of leasing rather than purchasing an asset is that leasing offers flexibility and a lower cost when disposing of the asset. Explain.

Q: Should gains and losses on a fair value hedge be recorded as

Should gains and losses on a fair value hedge be recorded as they occur, or should they be recorded to coincide with losses and gains on the item being hedged?

Q: Maltese Laboratories incurred the following research and developments costs related to its

Maltese Laboratories incurred the following research and developments costs related to its pharmaceutical business: Internal projects (salaries, supplies, overhead for R&D facilities) = $620,000 Payme...

Q: Hines Moving Company held a fixed-rate debt of $2

Hines Moving Company held a fixed-rate debt of $2 million. The company wanted to hedge its fair value exposure with an interest rate swap. However, the only notional available at the time, on the type...

Q: What transactions are included in income from continuing operations? Briefly explain

What transactions are included in income from continuing operations? Briefly explain why it is important to segregate income from continuing operations from other transactions affecting net income.