Wiley CPA Review QOTD – FAR

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The following is from the Wiley CPA 2011 Test Bank Software (Online). Click here to get over 1,300 FAR CPA Exam practice questions for $87.

Topic: Accounting Changes

The 2010 financial statements of Bice Company reported net income for the year ended December 31, 2010, of $2,000,000. On July 1, 2011, subsequent to the issuance of the 2010 financial statements, Bice changed from an accounting principle that is not generally accepted to one that is generally accepted. If the generally accepted accounting principle had been used in 2010, net income for the year ended December 31, 2010, would have been decreased $1,000,000. On August 1, 2011, Bice discovered a mathematical error relating to its 2010 financial statements. If this error had been discovered in 2010, net income for the year ended December 31, 2010, would have been increased $500,000.

What amount, if any, should be included in net income for the year ended December 31, 2011, because of the items noted above?

A: $0.
B: $ 500,000 decrease.
C: $ 500,000 increase.
D: $1,000,000 decrease.

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