During Year 2, Orca Corp. decided to change from the FIFO method of inventory valuation to the weighted-average method. Inventory balances under each method were as follows. FIFO Weighted-average January 1, Year 2 $71,000 $77,000 December 31, Year 2 $79,000 $83,000 Orca's income tax rate is 30%. Orca should report the cumulative effect of this accounting change as a(n) a) adjustment to beginning retained earnings. b) component of income from continuing operations. c) extraordinary item. d) component of income after extraordinary items.
During Year 2, Orca Corp. decided to change from the FIFO method of inventory valuation to the weighted-average method. Inventory balances under each method were as follows. FIFO Weighted-average January 1, Year 2 $71,000 $77,000 December 31, Year 2 $79,000 $83,000 Orca's income tax rate is 30%. Orca should report the cumulative effect of this accounting change as a(n) a) adjustment to beginning retained earnings. b) component of income from continuing operations. c) extraordinary item. d) component of income after extraordinary items.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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During Year 2, Orca Corp. decided to change from the FIFO method of inventory valuation to the weighted-average method. Inventory balances under each method were as follows.
FIFO Weighted-average
January 1, Year 2 $71,000 $77,000
December 31, Year 2 $79,000 $83,000
Orca's income tax rate is 30%.
Orca should report the cumulative effect of this accounting change as a(n)
FIFO Weighted-average
January 1, Year 2 $71,000 $77,000
December 31, Year 2 $79,000 $83,000
Orca's income tax rate is 30%.
Orca should report the cumulative effect of this accounting change as a(n)
a) adjustment to beginning retained earnings .
b) component of income from continuing operations.
c) extraordinary item.
d) component of income after extraordinary items.
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