Intermediate Accounting
9th Edition
ISBN: 9781259722660
Author: J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher: McGraw-Hill Education
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Chapter 20, Problem 20.7Q
Southeast Steel, Inc., changed from the FIFO inventory costing method to the LIFO method during 2017. How would this change likely be reported in the 2018 comparative financial statements?
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Southeast Steel, Inc., changed from the FIFO inventory costing method to the LIFO method during 2017. Howwould this change likely be reported in the 2018 comparative financial statements?
Southeast Steel, Inc., changed from the FIFO inventory costing method to the LIFO method during 2015. How would this change likely be reported in the 2016 comparative financial statements?
Sugarbaker Designs, Inc., changed from the FIFO inventory costing method to the average cost method during 2016. Which items from the 2015 financial statements should be restated on the basis of the average cost method when reported in the 2016 comparative financial statements?
Chapter 20 Solutions
Intermediate Accounting
Ch. 20 - Prob. 20.1QCh. 20 - There are three basic accounting approaches to...Ch. 20 - Prob. 20.3QCh. 20 - Lynch Corporation changes from the...Ch. 20 - Sugarbaker Designs Inc. changed from the FIFO...Ch. 20 - Most changes in accounting principles are recorded...Ch. 20 - Southeast Steel, Inc., changed from the FIFO...Ch. 20 - Prob. 20.8QCh. 20 - Its not easy sometimes to distinguish between a...Ch. 20 - For financial reporting, a reporting entity can be...
Ch. 20 - Prob. 20.11QCh. 20 - Describe the process of correcting an error when...Ch. 20 - Prob. 20.13QCh. 20 - If it is discovered that an extraordinary repair...Ch. 20 - Prob. 20.15QCh. 20 - Change in inventory methods; FIFO method to the...Ch. 20 - Change in inventory methods; average cost method...Ch. 20 - Change in inventory methods; FIFO method to the...Ch. 20 - Change in depreciation methods LO203 Irwin, Inc.,...Ch. 20 - Prob. 20.5BECh. 20 - Book royalties LO204 Three programmers at Feenix...Ch. 20 - Warranty expense LO204 In 2017, Quapau Products...Ch. 20 - Change in estimate; useful life of patent LO204...Ch. 20 - Prob. 20.9BECh. 20 - Error correction LO206 In 2018, internal auditors...Ch. 20 - Prob. 20.11BECh. 20 - Error correction LO206 In 2018, the internal...Ch. 20 - Change in principle; change in inventory methods ...Ch. 20 - Change in principle; change in inventory methods ...Ch. 20 - Change from the treasury stock method to retired...Ch. 20 - Change in principle; change to the equity method ...Ch. 20 - Prob. 20.5ECh. 20 - FASB codification research LO202 Access the FASB...Ch. 20 - Change in principle; change in inventory cost...Ch. 20 - Change in inventory methods; FIFO method to the...Ch. 20 - Change in inventory methods; FIFO method to the...Ch. 20 - Change in depreciation methods LO203 For...Ch. 20 - Change in depreciation methods LO203 The Canliss...Ch. 20 - Book royalties LO204 Dreighton Engineering Group...Ch. 20 - Loss contingency LO204 The Commonwealth of...Ch. 20 - Warranty expense LO204 Woodmier Lawn Products...Ch. 20 - Prob. 20.15ECh. 20 - Accounting change LO204 The Peridot Company...Ch. 20 - Change in estimate; useful life and residual value...Ch. 20 - Classifying accounting changes LO201 through...Ch. 20 - Error correction; inventory error LO206 During...Ch. 20 - Error corrections; investment LO206 Required: 1....Ch. 20 - Prob. 20.21ECh. 20 - Prob. 20.22ECh. 20 - Prob. 20.23ECh. 20 - Inventory errors LO206 Indicate with the...Ch. 20 - Classifying accounting changes and errors LO201...Ch. 20 - Change in inventory costing methods; comparative...Ch. 20 - P 20-2 Change in principle; change in method of...Ch. 20 - Change in inventory costing methods; comparative...Ch. 20 - Change in inventory methods LO202 The Rockwell...Ch. 20 - Change in inventory methods LO202 Fantasy...Ch. 20 - Change in principle; change in depreciation...Ch. 20 - Depletion; change in estimate LO204 In 2018, the...Ch. 20 - Accounting changes; six situations LO201, LO203,...Ch. 20 - Prob. 20.9PCh. 20 - Inventory errors LO206 You have been hired as the...Ch. 20 - Error correction; change in depreciation method ...Ch. 20 - Accounting changes and error correction; seven...Ch. 20 - Prob. 20.13PCh. 20 - Prob. 20.14PCh. 20 - Prob. 20.15PCh. 20 - Prob. 20.16PCh. 20 - Prob. 20.17PCh. 20 - Integrating Case 201 Change to dollar-value LIFO ...Ch. 20 - Prob. 20.2BYPCh. 20 - Prob. 20.3BYPCh. 20 - Analysis Case 204 Change in inventory methods;...Ch. 20 - Prob. 20.5BYPCh. 20 - Prob. 20.6BYPCh. 20 - Analysis Case 208 Various changes LO201 through...Ch. 20 - Analysis Case 209 Various changes LO201 through...Ch. 20 - Prob. 20.10BYPCh. 20 - Prob. 20.11BYPCh. 20 - Prob. 20.12BYPCh. 20 - Prob. 1CCTC
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- Sugarbaker Designs Inc. changed from the FIFO inventory costing method to the average cost method during2018. Which items from the 2017 financial statements should be restated on the basis of the average cost methodwhen reported in the 2018 comparative financial statements?arrow_forwardBTS, Inc. has adopted a new accounting system for measuring the value of its inventory from weighted average method (which they used from start of operations in 2017 until 2019) to first-in, first-out method (which they will use starting 2020). In year 2020, how will BTS, Inc. account for the change in its cost formula? A.Treated as change in accounting estimate with a retrospective adjustment for years 2017 to 2019 B.An entry will not be necessary since past is past. C.Treated as change in accounting policy with an adjustment in Retained Earnings during 2020 D.Treated as change in accounting policy which will only affect year 2020 and onwardsarrow_forwardWhat was the reason for the FASB changing the accounting method for reporting lower-of-cost-or-market inventory in 2015?arrow_forward
- The management of Jones Company has asked its accounting department to describe the effect upon the company’s financial position and its income statements of accounting for inventories on the LIFO rather than the FIFO basis during 2017 and 2018. The accounting department is to assume that the change to LIFO would have been effective on January 1, 2017, and that the initial LIFO base would have been the inventory value on December 31, 2016. The following are the company’s financial statements and other data for the years 2017 and 2018 when the FIFO method was employed. Financial Position as of 12/31/16 12/31/17 12/31/18 Cash $ 91,300 $132,000 $152,600 Accounts receivable 81,100 101,700 123,000 Inventory 123,000 139,300 178,000 Other assets 158,300 173,400 201,900 Total assets $453,700 $546,400 $655,500 Accounts payable $ 39,900 $ 61,000 $ 81,100 Other liabilities 69,800 81,600 113,500 Common stock…arrow_forwardAt the begining of 2020, Flynne Company decided to change from the LIFO to the FIFO inventory cost flow assumption. The following data are available: 1. Prepare the journal entry at the beginning of 2020 to reflect the change. 2. At the end of 2020, prepare comparative income statements for 2020 and 2019. 3. At the end of 2020, prepare comparative retained earnings statements for 2020 and 2019. 4. Prepare a note to the comparative financial statements that discusses the nature and reason for the change from LIFO to FIFO and discloses the effects of the change on the company’s income statement for 2019 and 2020. (Ignore the effects on the balance sheet and statement of cash flows because there is…arrow_forwardIndicate whether the current ratio, inventory turnover ratio, and debt to total assets ratio would be overstated, understated, ornot affected for the years ended December 31, 2022, and December 31, 2023.arrow_forward
- Sheffield Company began operations on January 1, 2018, and uses the average-cost method of pricing inventory. Management is contemplating a change in inventory methods for 2021. The following information is available for the years 2018–2020. Net Income Computed Using Average-Cost Method FIFO Method LIFO Method 2018 $16,010 $19,020 $12,120 2019 18,070 21,180 13,950 2020 20,200 25,010 17,110 (a) Prepare the journal entry necessary to record a change from the average cost method to the FIFO method in 2021. (b) Determine net income to be reported for 2018, 2019, and 2020, after giving effect to the change in accounting principle. (c) Assume Sheffield Company used the LIFO method instead of the average cost method during the years 2018–2020. In 2021, Sheffield changed to the FIFO method. Prepare the journal entry necessary to record the change in principle.arrow_forwardGoddard 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 increasearrow_forwardWaterway Company began operations on January 1, 2018, and uses the average-cost method of pricing inventory. Management is contemplating a change in inventory methods for 2021. The following information is available for the years 2018–2020. Net Income Computed Using Average-Cost Method FIFO Method LIFO Method 2018 $16,110 $18,880 $12,030 2019 17,960 20,820 13,910 2020 20,000 24,850 17,140 (a) Prepare the journal entry necessary to record a change from the average cost method to the FIFO method in 2021. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit Enter an account title Enter a debit amount Enter a credit amount Enter an account title Enter a debit amount Enter a credit amount (b) Determine net income to be…arrow_forward
- Windsor Company began operations on January 1, 2018, and uses the average-cost method of pricing inventory. Management is contemplating a change in inventory methods for 2021. The following information is available for the years 2018-2020. 2018 2019 2020 Net Income Computed Using Average-Cost Method $16,080 17,980 19,920 FIFO Method LIFO Method $18,980 $11,940 14,020 17,050 20,800 24,890 (a) Prepare the journal entry necessary to record a change from the average cost method to the FIFO method in 2021. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Account Titles and Explanation Debit Creditarrow_forwardSunland Company uses the FIFO method for internal reporting purposes and LIFO for external reporting purposes. The balance in the LIFO Reserve account at the end of 2020 was $277000. The balance in the same account at the end of 2021 is $419000. Sunland’s Cost of Goods Sold account has a balance of $2110000 from sales transactions recorded during the year. What amount should Sunland report as Cost of Goods Sold in the 2021 income statement?arrow_forwardThe management of Gresa Inc. is reevaluating the appropriateness of using its present inventory cost flow method, which is average-cost. The company requests your help in determining the results of operations for 2017 if either the FIFO or the LIFO method had been used. For 2017, the accounting records show these data: Inventories Purchases and Sales Beginning (7,000 units) $14,000 Total net sales (236,000 units) $1,038,400 Ending (21,000 units) Total cost of goods purchased (250,000 units) 596,500 Purchases were made quarterly as follows. Quarter Units Unit Cost Total Cost 1 65,000 $2.20 $143,000 2 55,000 2.30 126,500 3 55,000 2.40 132,000 4 75,000 2.60 195,000 250,000 $596,500 Operating expenses were $150,000, and the company’s income tax rate is 30%. Prepare comparative condensed income statements for 2017 under FIFO and…arrow_forward
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