9th Edition

ISBN: 9781260998726

Author: SPICELAND

Publisher: MCG

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Textbook Question

Chapter 20, Problem 20.4BYP

Analysis Case 20–4

Change in inventory methods; concepts

• LO20–2, LO20–3

Generally accepted accounting principles should be applied consistently from period to period. However, changes within a company, as well as changes in the external economic environment, may force a company to change an accounting method. The specific reporting requirements when a company changes from one generally accepted inventory method to another depend on the methods involved.

Required:

Explain the accounting treatment for a change in inventory method (a) not involving LIFO, (b) from the LIFO method, and (c) to the LIFO method. Explain the logic underlying those treatments. Also, describe how disclosure requirements are designed to address the departure from consistency and comparability of changes in accounting principle.

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Chapter 20, Problem 20.3BYP

Chapter 20, Problem 20.5BYP

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Chapter 20 Solutions

INTERMEDIATE ACCOUNTING RMU 9TH EDITION

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Solution Summary: The author explains the accounting treatment for a change in inventory method. The retrospective application advantage is to compare the statements from year to year.

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