Loire Co., a calendar year-end firm, has used the FIFO method of inventory measurement since it begun operations in Year 3. Loire changed to the weighted-average method for determining inventory costs at the beginning of Year 6. Justification for this change was that it better reflected inventory flow. The following schedule shows year-end inventory balances under the FIFO and weighted-average methods: Year FIFO Weighted-Average Year 3 90,000 108,000 Year 4 156,000 142,000 Year 5 166,000 150,000 In its Year 6 financial statements, Loire included comparative statements for both Year 5 and Year 4. What adjustment, before taxes, should Loire make retrospectively to the balance reported for retained earnings at the beginning of Year 4?
Loire Co., a calendar year-end firm, has used the FIFO method of inventory measurement since it begun operations in Year 3. Loire changed to the weighted-average method for determining inventory costs at the beginning of Year 6. Justification for this change was that it better reflected inventory flow. The following schedule shows year-end inventory balances under the FIFO and weighted-average methods:
|
Year |
FIFO |
Weighted-Average |
|
Year 3 |
90,000 |
108,000 |
|
Year 4 |
156,000 |
142,000 |
|
Year 5 |
166,000 |
150,000 |
In its Year 6 financial statements, Loire included comparative statements for both Year 5 and Year 4.
What adjustment, before taxes, should Loire make retrospectively to the balance reported for
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