Question

On March 1, 2019, Desert discovered that R&D costs of $150,000 for 2017 were capitalized as a part of the Historical Cost of the Patent, instead of being expensed. Income from Continuing Operations for 2019 includes the current year's R&D costs of $125,000 as an expense.

1. What type of scenario is addressed?                            [ Select ]                       ["Change in Accounting Principle", "Change in Accounting Estimate", "Correction of an Error", ""]      

2. What adjustment (if any) is needed to Desert's ICO for 2019?                            [ Select ]                       ["Decrease ICO $150,000 to correctly expense the R&D", "Decrease ICO $105,000 to correctly expense the R&D", "Decrease ICO $25,000 to account for the additional R&D expense incurred", "No Change Needed"]      

3. Does Desert need to restate its 2017 financial statements?

Answer 1

Solutions Given data is, discovered that - On march 1, 2019 Deseat RED costs of $150000 - Income from continuing operations for 2019. Includes the current year's RED costs of $12500D as an expense. I what type of scenario is addressed? "Change in accounting policy. (2) what adjustment (if any) is needed to Decert's ECO for 2019? The RED costs is already classified as an expense so, there is no adjustment is needed to Desert's Ico for 2016. These can be capitalized when the costs belongs to development phase (3) Here, the desest needs to restate it's financial statement of 2017 & 15000 of REID esperse to be debited income statement yes, Desert needs to restate its 2017 Financial