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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
7
Transcribed Image Text: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.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 4 steps with 1 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education