On December 31, 2021, ECHO Company appropriately changed its inventory valuation method to the FIFO cost method from the average cost method for financial statement and income purposes. The change will result in a P350,000 increase in the beginning inventory on January 1, 2021.

On December 31, 2021, ECHO Company appropriately changed its inventory valuation method to the FIFO cost method from the average cost method for financial statement and income purposes. The change will result in a P350,000 increase in the beginning inventory on January 1, 2021.

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

Assuming an income tax rate of 30%, how much is the cumulative effect of this change that should be reported in the income statement for the year ended December 31, 2021?

On December 31, 2021, ECHO Company appropriately changed its inventory valuation
method to the FIFO cost method from the average cost method for financial statement and
income purposes. The change will result in a P350,000 increase in the beginning inventory
on January 1, 2021.

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