Chapter 20, Problem 20.2BYP

Requirement 1:

To determine

Change in inventory methods:

Change in inventory method is said to be the difference between the previous years’s ending inventory and the current year’s ending inventory.

Disclosure Note:

Disclosure notes are added in the footnotes of the financial statement of a company. These notes contain certain information about the company which cannot be enclosed in the face of the income statement, balance sheet, statement of cash flows, and statement of changes in equity.

To Prepare: the disclosure note for M Department Stores which will be included in the 2016 financial statements.

Requirement 2:

To determine

To Explain: the reason for which the cumulative effect of the change on prior years’ income is not determinable.