For each of the situations described above, provide the information indicated below assuming it is December 2016. Complete your discussion of each situation before going on to the next situation. These are not related and should be looked at seperately.
1. Type of accounting change.
2. Manner of reporting the change under current generally accepted accounting principles including
a discussion, where applicable, of how amounts are computed.
3. Effect of the change on the balance sheet and income statement.
4. Footnote disclosures that would be necessary.
Case 1- Mikes Solutions changed from the cash to the accrual basis of accounting for recognizing revenue on its service contracts on January 1, 2016.
Case 2 -Company B on June 30, 2015 expensed a $24,000, 2 year insurance policy.
Case 3- Company C in January of 2015, was told they would be fined for violating state regulations. After discussing it with their attorney's they received a possible range of between $150,000 to $400,000 in liability for the violation. When the financial statements were issued in 2015, a settlement had not been made with state authorities, so they accrued a contingent liability of $175,000. Late in 2016, a settlement was reached with state authorities to pay a total of $350,000 in penalties.
Case 4 G company decides in January 2016 that they should change to units of activity for all new and existing factory equipment. The straight-line method was previously used.