For 2026, P Company estimated its two-year equipment warranty costs based on $23 per unit sold in 2026. Experience during 2027 indicated that the estimate should have been based on $25 per unit. The effect of this $2 difference from the new estimate is reported:
Question 7 options:
in 2027 income from continuing operations.
as an accounting change, net of tax, below 2027 income from continuing operations.
as an accounting change requiring 2026 financial statements to be restated.
as a correction of an error requiring 2026 financial statements to be restated.