Essay about Deloitte LabCo
Subject: Halibut Contract
Accounting Method for Halibut Contract
It has recently come to the attention of our audit team that a change in accounting methods has been proposed to LabCo’s contract with Halibut. The current accounting method is percentage-of-completion, while the plan proposed is a switch to the completed contract method. During our investigation into this matter, we analyzed the codification and validation for the percentage-of-completion method, and determined that the proposed change would be an inappropriate course of action.
Justification of Existing Methods
The Financial Accounting Standards Board’s codification helps reinforce our decision to not switch accounting …show more content…
Accounting for the Estimate
Change in accounting estimate is defined as a revision of an estimate because of new information or of a new experience. Accounting for a new estimate occurs at the end of each accounting period, which is useful for preparing financial statements. Since these facts change from one accounting period to the next, it does not make it feasible to recreate a financial statement each time there is new information. To account for these