Briefly explain accounting changes after an acquisition in the context of accounting changes covered by ASC 250 “Accounting Changes and Error Corrections.”

Explain the functional relationship between volume changes, pressure changes, and gas flow into and out of the lung during pulmonary ventilation.

There have been recent changes to laws regarding leasing. What are these changes? How have they impacted accounting and reporting for firms that use leasing in their business?

ASC 250 “Accounting Changes and Error Corrections”

            This case clarified the treatment of accounting changes after acquisitions. As we have seen, FASB’s guidance comes through ASC 805 “Business Combinations.” However, the guidance for other types of accounting changes is in ASC 250 “Accounting Changes and Error Corrections.” This section will integrate accounting changes after an acquisition with the accounting changes listed in ASC 250.

            ASC 250 lists four types of accounting changes.

Change in Accounting Principle – for example, a new revenue-recognition standard

Change in Accounting Estimate – for example, change in estimated useful life of a depreciable asset

Change in Reporting Entity

Correction of an Error in previously issued financial statements – for example, last period’s inventory and therefore retained earnings were overstated

            One particularly confusing element of ASC 250 is the category called “change in reporting entity.” To the unwary observer this sounds a lot like an acquisition, but that is actually not the case. The reason that the distinction is critical is that ASC 250 prescribes a retroactive accounting to “change in reporting entity,” but as we just saw the accounting treatment for acquisitions is prospective, with only limited pro-formal retroactive disclosures.

            The key accounting question for these four types of changes and errors is whether the change is accounted for retrospectively or prospectively. In the former case, we adjust previous financial statements to reflect the new information. In the latter case, we make no adjustments to previous financial statements.

            To help you become more familiar with these terms and the requirements of the codification, Work Schedule 6 lists the four scenarios covered by ASC 250. As the schedule shows, three of the four scenarios are treated retrospectively, including a “change in reporting entity.” To gain a better understanding of what retrospective and prospective means, please identify the paragraph number that prescribes the appropriate accounting treatment (retrospective or prospective) to the four scenarios. Although you are only asked to identify the paragraph number, it is suggested that you also identify the specific word(s) in the paragraph that indicate retrospective or prospective treatment for each of the four types of changes.

            As the schedule indicates, changes and corrections are accounted for retrospectively, with the exception of a change in estimate which is accounted for prospectively. Our focus here is to clarify that changes in accounting entity does not cover acquisitions. According the ASC 250-10-34-21, “Changes in Accounting entity” consists of an accounting change that results in a “different reporting entity”. To the casual observer, acquisitions would seem to fit this category, with the requirement of retroactive restatement of all prior periods as if the acquired company had always been a part of the acquirer. However, this is not the case, as ASC 250-10-20 indicates (emphasis added):

A change in reporting entity is limited mainly to the following:

Presenting consolidated or combined financial statements in place of financial statements of individual entities

Changing specific subsidiaries that make up the group of entities for which consolidated financial statements are presented

Changing the entities included in combined financial statements.

            Item (b) at first view seems to include acquisitions, however the codification adds the following exclusionary statement:  

Neither a business combination accounted for by the acquisition method nor the consolidation of a VIE pursuant to topic 810 is a change in reporting entity.

            To summarize, “change in reporting entity”, which are accounted for retroactively, relates to the decision to consolidate existing subsidiaries (a topic that is sometimes covered in a senior-level accounting course). It does not relate to newly-acquired subsidiaries, which are accounted for prospectively with limited retrospective disclosures. The main takeaway is that acquisitions are not covered by “change in reporting entity” and receive prospective accounting treatment with only limited retrospective disclosures.

Any potential changes you foresee occurring with these issues- multicultural or diversity issues and changes to family structure.

Cellular adaptation refers to changes made by a cell in response to adverse environmental changes. List the five (5) major types of cellular adaptation and write one sentence for each explaining what it is.

Pop Design Inc. changes the way it markets its products. It also makes changes in the designs of its store layouts citing generational differences as the reason. Pop Design is responding to:

Multiple Choice

• A. Internal changes

• B. High labor costs

• C. Demographic characteristics

• D. Technological advancements

• E. Organizational culture

  Discuss changes in the teenage brain. How do these brain changes impact thinking and behavior?       

What could parents do to better understand and support teenagers in their development?

The Australian Banking Association conducts a survey every five years into the status of women in the banking industry, including aspects relating to working hours. In the 1997 survey, which incorporated 705 respondents, 211 reported working more than 50 hours per week. Of the 620 respondents to the 2002 survey, 224 reported to be working in excess of 50 hours per week. The Australian Bankers Association is interested if there has been any change in work patterns and wished to test this proposition at the 10% level of significance.

1. If the hypotheses are written in the form of the proportion in 1997 minus the proportion in 2002, state the direction of the alternative hypothesis used to test whether there has been a change in attitudes. Type gt (greater than), ge (greater than or equal to), lt (less than), le (less than or equal to) or ne (not equal to) as appropriate in the box
2. Calculate the test statistic for the Z test correct to two decimal places.
3. Use the tables in the text to determine the critical value used to conduct the test. If there are two critical values, state only the upper value.
4. Is the null hypothesis rejected for this test? Type yes or no.
5. Hence, on the basis of this test, does there appear to have been a change in the working patterns of women in the banking industry? Type yes or no.

Consider the five survey questions below from a job satisfaction survey, and indicate the levels of measurement used for each question (nominal, ordinal, interval, or ratio). Briefly explain your rationale for each decision. Double check the work of at least one peer, and discuss any differences. A. I feel I am being paid a fair amount for the work I do (Fields, 2002). Disagree very much Disagree moderately Disagree slightly Agree slightly Agree moderately Agree very much B. My primary role within the company is: administrative. maintenance. laborer. manager. driver. C. A reasonable amount I should be expected to contribute annually to the company's health plan is: 0 to $2,000. $2,001 to $4,000. $4,001 to $6,000. $6,001 to $8,000. $8,001 or greater. D. Indicate the highest amount you were able to contribute to your 401k in 2017. $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 $9,000 $10,000 $11,000 $12,000 $13,000 $14,000 $15,000 $16,000 $17,000 $18,000 $19,000 $20,000 $21,000 $22,000 $23,000 $24,000 Reference Fields, D. L. (2002). Taking the measure of work: A guide to validated scales for organizational research and diagnosis. Thousand Oaks, CA: Sage.