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1. If a Company changes from an inappropriate accounting principle to an appropriate accounting principle in the preparation of its latest financial statements, is this change a change in accounting principle or a correction of an accounting error? Why?

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1.  If a Company changes from an inappropriate accounting principle to an appropriate accounting principle in the preparation of its latest financial statements, is this change a change in accounting principle or a correction of an accounting error?  Why?
 
2.  Provide 3 specific examples of changes in accounting principle.
3.  There are two approaches acceptable under US GAAP to reporting accounting changes.  When is the prospective approach to reporting an accounting change allowable? 
Be specific and provide an example requiring the use of the prospective approach to reporting an accounting change.
 
4.  The Robinson Company purchased a piece of equipment on January 1, 2018 for …$75,000
The accountant improperly expensed this purchase as operating expenses during 2018.
The equipment has no salvage value and a useful life of (in years)………..10
Robinson Company has a corporate average effective income tax rate of …….35%
Robinson Company operates and reports its financial statements on a calendar year.
After the 2018 financial statements are issued and after Robinson Company has closed its books for 2018, the Company discovered the above error.
a) Prepare the first journal entry Robinson Company would record during 2019 on its books to correct this error?
b) How much depreciation expense would Robinson Company record during 2019 for this piece of equipment?
c) Would Robinson Company report this correction of an error on a retrospective or a prospective basis?  Why?
5.  If there has been a change in the Reporting Entity, how are these changes reported under US GAAP-on a Retrospective or a Prospective Basis?
 
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1. Explain in detail the two alternative methods a company may use to report a net operating loss (reports a Loss Before Income Taxes). Be specific and detailed in your answer.

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1.  Explain in detail the two alternative methods a company may use to report a net operating loss (reports a Loss Before Income Taxes).
Be specific and detailed in your answer.  
2. The Williams Corporation, which operates on a calendar year, started its operations on January 1, 2015.   
Williams pay corporate income taxes at the rate of 35%
Williams Corporation has no permanent or timing differences (no differences between reported accounting profits and taxable income) in any calendar year.
Below is Williams Corporation GAAP (Accounting) Income Before Taxes for the following calendar year ends:
2015$100,000
2016$500,000
2017($400,000)
2018($300,000)
2019$300,000
a) Prepare the 2017 year end journal entry for income tax expenses (benefit).
b) Assume that Williams is unable to determine if the firm will be profitable in the future when preparing the 2018 journal entry (entries)
Prepare the 2018 year end journal entry (entries) for income tax expenses (benefit) .
c) Prepare the 2019 year end journal entry (entries) for income tax expenses.
3.  Your firm has been conducting tax research by looking at cases settled in federal courts as a means to decide what position to take when reporting this year’s taxes.
Based upon the outcome of existing tax law cases, and after consulting with the firm’s auditors and attorney’s, you feel there is a 75% chance that if your firm takes
this tax position when it files its US tax return, the firm will be successful if the IRS challenges this tax position.  The potential benefit from taking this position in the current
year is material to the Balance Sheet and Income Statement.   The tax benefit is an all or nothing tax benefit.
Each of the tax law cases to date have also upheld 100% of the tax benefit claimed by other firms related to this tax position.
a) With specific reference to the ASC for uncertain tax positions,  summarize the accounting rules that apply.
b) Would the firm be able to recognize the entire tax benefit from this tax position in the current year’s income statement?
4.  Assume the following information for Robert Corporation for the year ended December 31, 2016:
Accounting Income Before Income Taxes########
Permanent Differences-Income Items Included
in the above Accounting Income Before Income Taxes Which Are Not Taxable$100,000
under the Income Tax rules
a) Record the journal entry for income tax expense and income taxes payable under US GAAP, assuming that the
US Corporate Income Tax Rate is 35%
for the year ended December 31, 2016.
5.  Assume the following information for Robert Corporation for the year ended December 31, 2016:
Accounting Income Before Income Taxes########
Permanent Differences-Income Items Included
in the above Accounting Income Before Income Taxes Which Are Not Taxable$100,000
under the Income Tax rules
Timing Differences:  Robert Corporation uses accelerated depreciation
methods for income tax purposes.  For 2016, income tax depreciation
expense using the accelerated method was greater than 
accounting (book) depreciation expense by$100,000
a) Record the journal entry for income tax expense, income taxes payable, and deferred income taxes payable under US GAAP, assuming that the
US Corporate Income Tax Rate is 35%
for the year ended December 31, 2016.
Assume this is the first year that Robert Corporation has been in operation.
 
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On January 1, Year 7, Colorado Corp. purchased a machine having an estimated useful life of 8 years and no salvage value.

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On January 1, Year 7, Colorado Corp. purchased a machine having an estimated useful life of 8 years and no salvage

value. The machine was depreciated by the double-declining-balance (DDB) method for both financial statement and income tax reporting. On January 1, Year 9, Colorado justifiably changed to the straight-line method for both financial statement and income tax reporting. Accumulated depreciation at December 31, Year 8, was $525,000. If the straight-line method had been used, the accumulated depreciation at December 31, Year 8, would have been $300,000. The retroactive adjustment to the accumulated depreciation account on January 1, Year 9, as a result of the change in depreciation method is 

 A.

$525,000

 B.

$0

 C.

$300,000

 D.

$225,000

 
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Project Descriptions SEC 10-K Paper You will be asked to select a company that is publically traded. You must research and secure the SEC 10-K Annual Report for the most recent year. This is often available at the company web site. Look for “Investor Information” or “Company Information”.

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Project Descriptions

SEC 10-K Paper

You will be asked to select a company that is publically traded. You must research and secure the SEC 10-K Annual Report for the most recent year. This is often available at the company web site. Look for “Investor Information” or “Company Information”. Save the file to your computer for access. There is no need to print as the report is usually 100 pages or more.

1.     Post the name of your company in the SEC 10-K company for my approval in the week 1 Discussion.

2.     Each student must select a different company so read the company names selected by classmates.

3.     You will use this company for discussion in the discussions during the semester.

4.     You will write a 2 – 3 page paper, single spaced, one inch margins, 12 pt font, with double space between paragraphs. Your paper should comment on the financial statements for your company as they relate to the information presented through week 5 material for our class, including the notes to the financial statements. ** Use headings in your paper such as Accounts Receivable and Inventory (topics from our textbook; other examples would be Balance Sheet and Income Statement). Please keep your paper to no more than 3 pages The report will be submitted after week 5 material on Property, Plant and Equipment (PPE). Do not consider material from weeks 7 and 8 in your paper.

5.     Take care to avoid academic dishonesty. Write your paper, read it, and edit. Use your own words.

6.     Please include a brief introduction of your company as well as a conclusion/summary at the end.

7.     You will also be required to include the Income Statement and Balance Sheet as an attachment to your report (you can cut and paste directly from the 10-K report).

8.     APA style is required for citations and a reference list. Use your own words. The reference list is most important!

9.     Ask questions if any of the requirements are unclear.

10.  Additional guidance for your paper and resources:

11.  Page count does not include title page, tables and exhibits, table of contents, and reference list

12.  Please include a title page (include your name on the title page)

13.  Include a reference list (business classes use APA format)

14.  Include in text citations (business classes use APA format)

15.  Your paper should use one-inch margins on the left, right, top, and bottom of each page, and font set at 12 point.

16.  Take care to comply with the UMUC policy for academic honesty

17.  Write your paper, in your own words, using accounting words from our textbook and explaining how these relate to the financial statements of your company

18.  Our discussion postings during the semester should assist you in completing this paper

19.  Visit the Accounting Toolbox in the Course Content of our LEO classroom

20.  The Accounting Toolbox is a constant resource in our UMUC undergraduate accounting courses

21.  Links and explanations to assist you with this paper may appear in this resource

22.  Additional information will be posted in the Week 1 Discussion area of Leo Classroom. Please make sure you review carefully and ask questions if you have any.

23.  SEC 10-K Power Point Presentation

24.  You will also be required to prepare a brief power point file of no more than 10 slides. Post the power point presentation in the discussion area for comments by other students.

25.  After you read the comments you may wish to make changes to your power point file before submitting it in the assignment folder along.

26.  Include a reference list in APA format.

27.  Ask questions if any of the requirements are unclear.

28.  You are required to post comments on the work of at least one other student who does not yet have comments so everyone has at least one set of comments. Do not wait until the last day to post your power point file so everyone has a chance to visit the files.

 
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