Answered: How should a company handle a LIFO…

How should a company handle a LIFO liquidation in an interim period when the liquidated inventory is expected to be replaced by year-end?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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What are the effects (UNDERSTATED, OVERSTATED, NO EFFECT AT ALL) of these inventory errors on (a) the current year's ASSET, LIABILITY, OWNERS EQUITY, COST OF GOODS SOLD, NET INCOME, and (b) the subsequent year's ASSET, LIABILITY, OWNERS EQUITY, COST OF GOODS SOLD, NET INCOME? Error 1. Understatement of ending inventory and understatement of purchases, but the purchase was recorded the next year. Current Year: ASSET - LIABILITY - OWNERS EQUITY - COST OF GOODS SOLD - NET INCOME - Subsequent Year: ASSET - LIABILITY - OWNERS EQUITY - COST OF GOODS SOLD - NET INCOME - Error 2. Sales of the current year recorded in the following year (corresponding goods were properly excluded from ending inventory of the current year) Current Year: ASSET - LIABILITY - OWNERS EQUITY - COST OF GOODS SOLD - NET INCOME - Subsequent Year: ASSET - LIABILITY - OWNERS EQUITY - COST OF GOODS SOLD - NET INCOME - Include some simple explanations. Thank you.
For each of the following items, indicate the type of accounting change. (a1) (a) (b) (c) (d) (e) (f) Change from the straight-line method of depreciation to the sum-of-the-years'-digits Change from the cash basis to the accrual basis of accounting Change from FIFO to LIFO method for inventory valuation purposes (retrospective application impractical) Change from presentation of statements of individual companies to presentation of consolidated statements Change due to failure to record depreciation in a previous period Change in the realizability of certain receivables Change from LIFO to FIFO method for inventory valuation purposes Save for Later Change in accounting estimate Change in accounting entity Change in accounting principle Correction of an error Attempts: 0 of 1 used Submit Answer
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Hello, I have a question with regard to determining opening inventory for a company's previous year when working with company financials. The company financial documents I am working from include consolidated balance sheets, consolidated statements of operations, consolidated statements of cash flows, and notes to consolidated financial statements including inventories. I am only looking for step by step help in determining the opening inventory for previous year when it is not provided. Thanks
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When the income effect of a LIFO liquidation is material, the SEC requires that the 10-K report disclose: Multiple Choice the dollar impact of LIFO liquidation on both a pre-tax and after-tax basis. the dollar impact of LIFO liquidation on the year-end inventory balance. this fact following a prescribed disclosure format. the dollar impact of LIFO liquidation on net income.
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- List and explain the substantive tests of Inventory and give example.