In 2024, Banchero Corp. changed from a FIFO cost flow assumption to average cost flow assumption for inventory valuation in financial reporting. Banchero's tax rate is 20%, and Banche has used, and will continue to use FIFO for tax reporting purposes. Below is a summary of cost of goods sold, as calculated under both methods, for Banchero's first three years of operations. 2022 2023 2024 FIFO COGS $205,100 $228,700 $226,400 Average cost COGS $236,800 $223,100 $258,700 Implementing the accounting change in 2024 will require a debit (enter as a positive number) or a credit (enter as a negative number) to retained earnings for what amount?

In 2024, Banchero Corp. changed from a FIFO cost flow assumption to average cost flow assumption for inventory valuation in financial reporting. Banchero's tax rate is 20%, and Banche has used, and will continue to use FIFO for tax reporting purposes. Below is a summary of cost of goods sold, as calculated under both methods, for Banchero's first three years of operations. 2022 2023 2024 FIFO COGS $205,100 $228,700 $226,400 Average cost COGS $236,800 $223,100 $258,700 Implementing the accounting change in 2024 will require a debit (enter as a positive number) or a credit (enter as a negative number) to retained earnings for what amount?

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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Amber Corporation reported income from continuing operations of $1,600,000 (after taxes) for the fiscal year ended December 31, 2020. The following information, which has not yet been considered or included in the above figure, has been revealed as well: 1. On December31, 2020, Amber adopted the FIFO cost method of inventory valuation. The company had previously used the average method. The change increased income for 2020 by $50,000 (pre-tax) and the cumulative effect of the change on prior years' income was a $60,000 (pre-tax) increase. Some equipment was sold for $100,000 cash during the year at a time when its book value was $140,000. (Depreciation has been correctly recorded.) 2. 3. Amber decided to discontinue its microchip division in 2020. During the current year, the loss on the disposal of this segment was $250,000 (before applicable taxes). Instructions Present in good form the income statement of Amber Corporation for 2020 starting with "Income from continuing operations…
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Blue Devil Inc. uses the LIFO inventory costing method for both tax reporting and financial reporting purposes. Blue Devil’s inventories are reported at $50 million on its balance sheet. In its footnotes, Blue Devil is required to report the amount at which inventories would have been reported under FIFO method. The difference between these two numbers is referred to as what? Group of answer choices LIFO holding gain LCM disclosures LIFO reserve LIFO liquidation
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