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ACC 537 Week 6 CA22-4 Analysis of Various Accounting

Changes and Errors ( Solution and Presentation )

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CA22-4 ( Analysis of Various Accounting Changes and Errors ) Katherine Irving , controller of Lotan Corp ., is aware of a pronouncement on accounting changes . After reading the pronouncement , she is confused about what action should be taken on the following items related to Lotan Corp . for the year 2014 .

1 . In 2014 , Lotan decided to change its policy on accounting for certain marketing costs . Previously , the company had chosen to defer and amortize all marketing costs over at least 5 years because Lotan believed that a return on these expenditures did not occur immediately . Recently , however , the time differential has considerably shortened , and Lotan is now expensing the marketing costs as incurred .