During 2019, DGP Company decided to change from the FIFO inventory valuation to the weighted average method. The income tax rate is 30%. FIFO Weighted Average January 1, inventory P7,100,000 P7,700,000 December 31, inventory 7,900,000 8,200,000 What amount should be reported in the cumulative effect of the change in accounting policy for 2019? A P600,000 decrease in retained earnings B P420,000 decrease in retained earnings P420,000 increase in retained earnings (D) P600,000 increase in retained earnings

During 2019, DGP Company decided to change from the FIFO inventory valuation to the weighted average method. The income tax rate is 30%. FIFO Weighted Average January 1, inventory P7,100,000 P7,700,000 December 31, inventory 7,900,000 8,200,000 What amount should be reported in the cumulative effect of the change in accounting policy for 2019? A P600,000 decrease in retained earnings B P420,000 decrease in retained earnings P420,000 increase in retained earnings (D) P600,000 increase in retained earnings

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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Question

During 2019, DGP Company decided to change from the FIFO inventory valuation to the weighted average method. The
income tax rate is 30%.
FIFO Weighted Average
January 1, inventory
P7,100,000
P7,700,000
December 31, inventory
7,900,000
8,200,000
What amount should be reported in the cumulative effect of the change in accounting policy for 2019?
A P600,000 decrease in retained earnings
B P420,000 decrease in retained earnings
P420,000 increase in retained earnings
(D) P600,000 increase in retained earnings

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