Question

Identify whether the changes described in each of the cases below require recognition in the CPA’s...

Identify whether the changes described in each of the cases below require recognition in the CPA’s audit report as to consistency. (Assume that the amounts are material.) YES or NO

(a) The company changed its inventory method to FIFO from weighted-average, which had been used in prior years.

(b) The company disposed of one of the two subsidiaries that had been included in its consolidated statements for prior years.

(c) The estimated remaining useful life of plant property was reduced because of obsolescence.

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Answer #1

Answer :-

(a) The company changed its inventory method to FIFO from weighted-average, which had been used in prior years.

Answer:- Yes , This change needs recognition  

(b) The company disposed of one of the two subsidiaries that had been included in its consolidated statements for prior years.

Answer:- No, This change do not required recognition

(c) The estimated remaining useful life of plant property was reduced because of obsolescence.

Answer:- No, This change do not required recognition

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