Megall Company began operations on Jan. 1, YR1. For tax purposes, Megall has always used FIFO method of inventory method, and will continue to do so. For financial reporting purpose, Megall has used LIFO. During YR3, Megall decides to change from the LIFO to the FIFO method of inventory valuation. Had Megall always used the FIFO method, COGS would have been lower by $25,000 in YR1 and lower by $35,000 in YR2. The tax rate is 35% every year. Prepare the necessary journal entry Megall will record in YR3 when it changes from the LIFO to the FIFO method. SECTION 3 - Q2 Fill in the blanks with either T (True) or F (False). Only input T or F. 1) Had Megall used FIFO, Inventory would have been higher by 15,000. 2) In YR1 and YR2, COGS on the Tax Book was higher. 3) This resulted in a deductible temporary difference.

Megall Company began operations on Jan. 1, YR1. For tax purposes, Megall has always used FIFO method of inventory method, and will continue to do so. For financial reporting purpose, Megall has used LIFO. During YR3, Megall decides to change from the LIFO to the FIFO method of inventory valuation. Had Megall always used the FIFO method, COGS would have been lower by $25,000 in YR1 and lower by $35,000 in YR2. The tax rate is 35% every year. Prepare the necessary journal entry Megall will record in YR3 when it changes from the LIFO to the FIFO method. SECTION 3 - Q2 Fill in the blanks with either T (True) or F (False). Only input T or F. 1) Had Megall used FIFO, Inventory would have been higher by 15,000. 2) In YR1 and YR2, COGS on the Tax Book was higher. 3) This resulted in a deductible temporary difference.

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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