Multiple Questions Answers

1. Which of the following changes would not be accounted for using the prospective approach? (Points : 8) 
A change to LIFO from average costing for inventories
A change from the individual application of the LCM rule to aggregate approach
A change from straight-line to double-declining balance depreciation
A change from double-declining balance to straight-line depreciation

2. When the retrospective approach is used for a change to the FIFO method, which of the following accounts is usually not adjusted? (Points : 8) 
Deferred Income Taxes
Inventory
Retained Earnings
All of the above usually are adjusted

3. If a change is made from straight-line to SYD depreciation, one should record the effects by a journal entry including (Points : 8) 
a credit to deferred tax liability.
a credit to accumulated depreciation.
a debit to depreciation expense.
No journal entry is required.

4. A change that uses the prospective approach is accounted for by (Points : 8) 
implementing it in the current year.
reporting pro forma data.
retrospective restatement of all prior financial statements in a comparative annual report.
giving current recognition of the past effect of the change.