Chapter 20, Problem 20.2E

Requirement 1:

To determine

Change in accounting principle:

A change in accounting principle is said to be a change in a format used, like using different depreciation method or changing from FIFO to LIFO method of inventory valuation.

Change in inventory methods:

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

To Calculate: the balance sheet in retained earnings at the time of the change using as if FIFO is been used in prior years for Corporation A.

Requirement 2:

To determine

To Prepare: the journal entry at the beginning of 2016 to record the change in accounting principle for Corporation A.