11. Biscoe. has historically used FIFO inventory costing method. In year 4 the company decided to switch to LIFO. The change caused net income in year 4 to be $ 44 million. If the company had used LIFO in year 3 the COGS would have been higher by $ 6 million to be higher that year. Year 1 and year 2 information is not available because of poor accounting and record keeping. Last year the company reported the following net income in its comparative income statements. year 1 year 2 year 3 net income S 70 $ 60 52 a. prepare the journal entry at the beginning of year 4 to record the change in accounting principle, b. are changes in accounting principle applied prospectively or retrospectively? c. what amounts will the company report for the net income in its year 2 to 4 comparative Income statements.
11. Biscoe. has historically used FIFO inventory costing method. In year 4 the company decided to switch to LIFO. The change caused net income in year 4 to be $ 44 million. If the company had used LIFO in year 3 the COGS would have been higher by $ 6 million to be higher that year. Year 1 and year 2 information is not available because of poor accounting and record keeping. Last year the company reported the following net income in its comparative income statements. year 1 year 2 year 3 net income S 70 $ 60 52 a. prepare the journal entry at the beginning of year 4 to record the change in accounting principle, b. are changes in accounting principle applied prospectively or retrospectively? c. what amounts will the company report for the net income in its year 2 to 4 comparative Income statements.
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter6: Cost Of Goods Sold And Inventory
Section: Chapter Questions
Problem 37BE: Lower of Cost or Market Garcia Company uses FIFO, and its inventory at the end of the year was...
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