On January 1, 2021, Blossom Corp. changed its inventory method to FIFO from LIFO for both financial and income tax reporting purposes. The change resulted in a $910000 increase in the January 1, 2021 inventory. Assume that the income tax rate for all years is 30%. Assuming that comparative statements are not issued, the cumulative effect of the accounting change should be reported by Blossom in its 2021 income statement as a $637000 cumulative effect of accounting change. retained earnings statement as a $910000 addition to the beginning balance. retained earnings statement as a $637000 addition to the beginning balance. income statement as a $910000 cumulative effect of accounting change.
On January 1, 2021, Blossom Corp. changed its inventory method to FIFO from LIFO for both financial and income tax reporting purposes. The change resulted in a $910000 increase in the January 1, 2021 inventory. Assume that the income tax rate for all years is 30%. Assuming that comparative statements are not issued, the cumulative effect of the accounting change should be reported by Blossom in its 2021 income statement as a $637000 cumulative effect of accounting change. retained earnings statement as a $910000 addition to the beginning balance. retained earnings statement as a $637000 addition to the beginning balance. income statement as a $910000 cumulative effect of accounting change.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
100%
On January 1, 2021, Blossom Corp. changed its inventory method to FIFO from LIFO for both financial and income tax reporting purposes. The change resulted in a $910000 increase in the January 1, 2021 inventory. Assume that the income tax rate for all years is 30%. Assuming that comparative statements are not issued, the cumulative effect of the accounting change should be reported by Blossom in its 2021
income statement as a $637000 cumulative effect of accounting change.
retained earnings statement as a $637000 addition to the beginning balance.
income statement as a $910000 cumulative effect of accounting change.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education