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 $ 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 $ 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.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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