Generally accepted accounting principles should be applied consistently from period to period. However, changeswithin a company, as well as changes in the external economic environment, may force a company to change anaccounting method. The specific reporting requirements when a company changes from one generally acceptedinventory method to another depend on the methods involved.Required:Explain the accounting treatment for a change in inventory method (a) not involving LIFO, (b) from the LIFOmethod, and (c) to the LIFO method. Explain the logic underlying those treatments. Also, describe how disclosurerequirements are designed to address the departure from consistency and comparability of changes in accountingprinciple
Generally accepted accounting principles should be applied consistently from period to period. However, changes
within a company, as well as changes in the external economic environment, may force a company to change an
accounting method. The specific reporting requirements when a company changes from one generally accepted
inventory method to another depend on the methods involved.
Required:
Explain the accounting treatment for a change in inventory method (a) not involving LIFO, (b) from the LIFO
method, and (c) to the LIFO method. Explain the logic underlying those treatments. Also, describe how disclosure
requirements are designed to address the departure from consistency and comparability of changes in accounting
principle
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