CPA Report
University of Phoenix

ACC-545
Deborah Asbury
January 14, 2013

CPA Report

To: Managers, Dasher Corp
From:
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Re: Response to questions for new corporation

Methodology used to determine deferred taxes Deferred taxes are simply taxes that will occur in the net taxable amounts in future years ("Summary of Statement," 2012).
Procedures for reporting accounting changes and error corrections First it needs to be determined on what kind of accounting change it is and if it will be beneficial for the company. A good example would be a change in their inventory recordings. If Dashers corp. competition has an inventory recording of FIFO, while Dasher corp. has an inventory recording as LIFO it would be difficult to compare the two company’s results when it came to inventory and sale pricing. Second, is it determine if the change is even a change. If Dasher Corp. is just changing inventory items and then it would be a change on existing inventory items and not new ones. Adoption of a new principle “in recognition of events that have occurred for the first time or that were previously immaterial is not an accounting change” (Kieso, Weygandt, & Warlfield, 2007, pg. 1153). There are three approaches that Dasher Corp. can do when reporting accounting principle changes. First is report the changes currently. Dasher Corp. must report these changes on the income statement as in irregular item. With this approach the company would make any changes to the prior year’s income statements. The prior year’s changes on the income statement appear only in the current year section (Kieso et al., 2007). The down side to this is by changing the prior years income statement you could lose some good will faith in your stock holders by thinking there is something wrong with the reporting methods. The