Goddard Company has used the FIFO method of inventory valuation since it began operations in 2018. The entity decided to change to the weighted average method for determining inventory costs at the beginning of 2021. The provided the year-end inventory balances under the FIFO and weighted average methods: Year FIFO Average Cost 2018 4,500,000 5,400,000 2019 7,800,000 7,100,000 2020 8,300,000 7,800,000 REQUIRED: What pretax amount should be reported in the 2021 statement of changes in equity as the cumulative effect of the change in accounting policy? a. 500,000 decrease b. 300,000 decrease c. 500,000 increase d. 300,000 increase
Goddard Company has used the FIFO method of
Year FIFO Average Cost
2018 4,500,000 5,400,000
2019 7,800,000 7,100,000
2020 8,300,000 7,800,000
REQUIRED:
What pretax amount should be reported in the 2021 statement of changes in equity as the cumulative effect of the change in accounting policy?
a. 500,000 decrease
b. 300,000 decrease
c. 500,000 increase
d. 300,000 increase
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