look at the file and answer the question as well please provide and exclamation of why this is the correct answer

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look at the file and answer the question as well please provide and exclamation of why this is the correct answer

look at the file and answer the question as well please provide and exclamation of why this is the correct answer
1) Rand Medical manufactures lithotripters. Lithotripsy uses shock waves instead of surgery to eliminate kidney stones. Physicians’ Leasing purchased a lithotripter from Rand for $2,040,000 and leased it to Mid-South Urologists Group, Inc., on January 1, 2021. (FV of $1 (Links to an external site.), PV of $1 (Links to an external site.), FVA of $1 (Links to an external site.), PVA of $1 (Links to an external site.), FVAD of $1 (Links to an external site.) and PVAD of $1 (Links to an external site.)) (Use appropriate factor(s) from the tables provided.)    Lease Description:       Quarterly lease payments 133,126—beginning of each period   Lease term   5 years (20 quarters)   No residual value; no purchase option       Economic life of lithotripter   5 years   Implicit interest rate and lessee’s incremental borrowing rate   12%   Fair value of asset 2,040,000   Required:1. How should this lease be classified by Mid-South Urologists Group and by Physicians’ Leasing?2. Prepare appropriate entries for both Mid-South Urologists Group (Lessee) and Physicians’ Leasing (Lessor) from the beginning of the lease through the second rental payment on April 1, 2021. Adjusting entries are recorded at the end of each fiscal year (December 31).3. Assume Mid-South Urologists Group leased the lithotripter directly from the manufacturer, Rand Medical, which produced the machine at a cost of $1.7 million. Prepare appropriate entries for Rand Medical from the beginning of the lease through the second lease payment on April 1, 2021.
look at the file and answer the question as well please provide and exclamation of why this is the correct answer
1.How should a company report its decision to change from a cash-basis to an accrual-basis of accounting? As a change in accounting principle, requiring the cumulative effect of the change (net of tax) to be reported in the income statement. Prospectively, with no amounts restated and no cumulative adjustment. As an extraordinary item (net of tax). As a Prior period, adjustment (net of tax), by adjusting the beginning balance of retained earnings. 2. Lore Co. changed from the cash basis to the accrual basis of accounting during 2005. The cumulative effect of this change should be reported in Lore’s 2005 financial statements as a Prior period adjustment resulting from the correction of an error. Prior period adjustment resulting from the change in accounting principle. Adjustment to retained earnings for an accounting principal change. Component of income after extraordinary item. 3. During Year 5, Orca Corp. decided to change from the FIFO method of inventory valuation to the weighted-average method. Inventory balances under each method were as follows: FIFO Weighted-average January 1, Year 5 $71,000 $77,000 December 31, Year 5 $79,000 $83,000 Orca’s income tax rate is 30%. In its Year 5 financial statements, what amount should Orca report as the cumulative effect of this accounting change? $2,800 $4,000 $4,200 $6,000 4. Which of the following statements is correct as it relates to changes in accounting estimates? Most changes in accounting estimates are accounted for retrospectively. Whenever it is impossible to determine whether a change in an estimate or a change in accounting principle occurred, the change should be considered a change in principle. Whenever it is impossible to determine whether a change in accounting estimate or a change in accounting principle has occurred, the change should be considered a change in estimate. It is easier to differentiate between a change in accounting estimate and a change in accounting principle than it is to differentiate between a change in accounting estimate and a correction of an error. 5. The senior accountant for Carlton Co., a public company with a complex capital structure, has just finished preparing Carlton’s income statement for the current fiscal year. While reviewing the income statement, Carlton’s finance director noticed that the earnings-pershare data have been omitted. What changes will have to be made to Carlton’s income statement as a result of the omission of the earnings-per-share data? No changes will have to be made to Carlton ’s income statement. The income statement is complete without the earnings-per-share data. Carlton’s income statement will have to be revised to include the earnings-per-share data. Carlton’s income statement will only have to be revised to include the earnings-per-share data if Carlton’s market capitalization is greater than $5mn. Carlton’s income statement will only have to be revised to include the earnings-per-share data if Carlton’s net income for the past two years is greater than $5mn. 6. Cuthbert Industrials, Inc. prepares three-year comparative financial statements. In year 3, Cuthbert discovered an error in the previously issued financial statements for year 1. The error affects the financial statements that were issued in years 1 and 2. How should the company report the error? a. The financial statements for years 1 and 2 should be restated; an offsetting adjustment to the cumulative effect of the error should be made to the comprehensive income in the year 3 financial statements. b. The financial statements for years 1 and 2 should not be restated; financial statements for year 3 should disclose the fact that the error was made in prior years. c. The financial statements for years 1 and 2 should not be restated; the cumulative effect of the error on years 1 and 2 should be reflected in the carrying amounts of assets and liabilities as of the beginning of year 3. d. The financial statements for years 1 and 2 should be restated; the cumulative effect of the error on years 1 and 2 should be reflected in the carrying amounts of assets and liabilities as of the beginning of year 3.

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