BTS, Inc. has adopted a new accounting system for measuring the value of its inventory from weighted average method (which they used from start of operations in 2017 until 2019) to first-in, first-out method (which they will use starting 2020). In year 2020, how will BTS, Inc. account for the change in its cost formula? A.Treated as change in accounting estimate with a retrospective adjustment for years 2017 to 2019 B.An entry will not be necessary since past is past. C.Treated as change in accounting policy with an adjustment in Retained Earnings during 2020 D.Treated as change in accounting policy which will only affect year 2020 and onwards
BTS, Inc. has adopted a new accounting system for measuring the value of its inventory from weighted average method (which they used from start of operations in 2017 until 2019) to first-in, first-out method (which they will use starting 2020). In year 2020, how will BTS, Inc. account for the change in its cost formula? A.Treated as change in accounting estimate with a retrospective adjustment for years 2017 to 2019 B.An entry will not be necessary since past is past. C.Treated as change in accounting policy with an adjustment in Retained Earnings during 2020 D.Treated as change in accounting policy which will only affect year 2020 and onwards
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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BTS, Inc. has adopted a new accounting system for measuring the value of its inventory from weighted average method (which they used from start of operations in 2017 until 2019) to first-in, first-out method (which they will use starting 2020). In year 2020, how will BTS, Inc. account for the change in its cost formula?
A.Treated as change in accounting estimate with a retrospective adjustment for years 2017 to 2019
B.An entry will not be necessary since past is past.
C.Treated as change in accounting policy with an adjustment in Retained Earnings during 2020
D.Treated as change in accounting policy which will only affect year 2020 and onwards
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