Pronghorn Co. decides at the beginning of 2025 to adopt the FIFO method of inventory valuation. Pronghorn had used the LIFO method for financial reporting since its inception on January 1, 2023, and had maintained records adequate to apply the FIFO method retrospectively. Pronghorn concluded that FIFO is the preferable inventory method because it reports the current cost of inventory on the balance sheet. The following table presents the effects of the change in accounting principles on inventory and cost of goods sold. Date January 1, 2023 December 31, 2023 December 31, 2024 December 31, 2025 Other information: 1. Inventory Determined by LIFO Method 2. $0 100 190 330 FIFO Method $0 90 250 420 Cost of Goods Sold Determined by LIFO Method $0 800 920 1,160 FIFO Method $0 810 850 1,130 For each year presented, sales are $2,960 and operating expenses are $920. Pronghorn provides two years of financial statements. Earnings per share information is not required.
Pronghorn Co. decides at the beginning of 2025 to adopt the FIFO method of inventory valuation. Pronghorn had used the LIFO method for financial reporting since its inception on January 1, 2023, and had maintained records adequate to apply the FIFO method retrospectively. Pronghorn concluded that FIFO is the preferable inventory method because it reports the current cost of inventory on the balance sheet. The following table presents the effects of the change in accounting principles on inventory and cost of goods sold. Date January 1, 2023 December 31, 2023 December 31, 2024 December 31, 2025 Other information: 1. Inventory Determined by LIFO Method 2. $0 100 190 330 FIFO Method $0 90 250 420 Cost of Goods Sold Determined by LIFO Method $0 800 920 1,160 FIFO Method $0 810 850 1,130 For each year presented, sales are $2,960 and operating expenses are $920. Pronghorn provides two years of financial statements. Earnings per share information is not required.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Pronghorn Co. decides at the beginning of 2025 to adopt the FIFO
method of inventory valuation. Pronghorn had used the LIFO method for
financial reporting since its inception on January 1, 2023, and had
maintained records adequate to apply the FIFO method retrospectively.
Pronghorn concluded that FIFO is the preferable inventory method
because it reports the current cost of inventory on the balance sheet. The
following table presents the effects of the change in accounting principles
on inventory and cost of goods sold.
Date
January 1, 2023
December 31, 2023
December 31, 2024
December 31, 2025
Other information:
1.
Inventory Determined by
LIFO
Method
2.
$0
100
190
330
FIFO
Method
$0
90
250
420
Cost of Goods Sold Determined by
LIFO Method
$0
800
920
1,160
FIFO Method
$0
810
850
1,130
For each year presented, sales are $2,960 and operating expenses
are $920.
Pronghorn provides two years of financial statements. Earnings per
share information is not required.
Transcribed Image Text:(b)
Prepare income statements reporting the retrospective application of
the accounting change from the LIFO method to the FIFO method for
2025 and 2024.
(
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O
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PRONGHORN CO.
Income Statement
$
$
2024
$
2025
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