Generally accepted accounting principles should be applied consistently from period to period. However, changeswithin a company, as well as changes in the external economic environment, may force a company to change anaccounting method. The specific reporting requirements when a company changes from one generally acceptedinventory 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 LIFOmethod, and (c) to the LIFO method. Explain the logic underlying those treatments. Also, describe how disclosurerequirements are designed to address the departure from consistency and comparability of changes in accountingprinciple

What is a good response to? Unrealized intercompany inventory profits from a prior period are eventually resold in the current period to continue to lower inventory numbers. This eventually increases the net income, however the profits are pushed until the resale period to accurately report the income. The sales of inventory between the parent company and the subsidiary should be eliminated and therefore would no affect the parent's financial statements. However, when the inventory is finally sold to an unaffiliated customer, not a subsidiary, the income would then be reported and affect the net income and financial statements. It is important to note for record keeping if a transaction has occurred upstream or downstream, however, any intercompany transactions, whether upstream or downstream, should be eliminated (Taylor, 2022).

Identify all false statements about changes in accounting principles and estimates. 1. Investors likely prefer the retrospective approach as it is best for comparability across reporting periods. 2. Companies likely prefer the prospective approach as it is the least costly to apply. 3. Voluntary changes in accounting principle such as inventory-method change and depreciation- method change require the retrospective approach. 4. Change in estimated useful life of equipment should be accounted for prospectively. 5. Good justifications from investors' viewpoint for a voluntary change in accounting principle is th the change increases earnings and is less costly to implement. 6. "Taking earnings bath" is more likely during a good year or the year of management change. O 3, 5, 6 O 1, 2, 4 2, 3, 4 O 5 & 6

Identify the following questions as most likely to be asked by an internal (I) or an external (E) userof accounting information. Which inventory items are out of stock?