Intermediate Accounting
3rd Edition
ISBN: 9780136912644
Author: Elizabeth A. Gordon; Jana S. Raedy; Alexander J. Sannella
Publisher: Pearson Education (US)
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Question
Chapter 21, Problem 21.3BE
To determine
To prepare: A footnote
Given Information:
Tax rate is 40%.
Cumulative cost of goods as per average cost method is $140,000.
Cumulative cost of goods as per LIFO method would have been $300,000.
Pre-tax income as per average method would have been $455,000.
Pre-tax income as per LIFO method is $230,000.
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Students have asked these similar questions
1. What amount should be reported as the pretax cumulative effect of this accounting
change?
During 2021, Revel Company decided to change from the FIFO method of inventory
valuation to weighted average method.
a. 400,000
b. 300,000
c. 600,000
d. 500,000
January 1 inventory
December 31 inventory
FIFO
7,200,000
7,900,000
2. What total amount should be reported as prior period error in the financial statements
for the year ended December 31, 2020?
a. 1,400,000
b. 600,000
WEIGHTED AVERAGE
7,700,000
8,300,000
ABC Company reported the ff events during 2020:
• It was decided to write off 800,000 from inventory which was over two years old
as it was obsolete.
c.800,000
d. 200,000
• Sales of 600,000 had been omitted from the financial statements for the year
ended December 31,2019
At the beginning of current year, Black Company changed the inventory cost flow method to FIFO from weighted average method for both financial statement and income tax reporting purposes. The change resulted in a P600,000 increase in the beginning inventory. Ignoring income tax, the accounting change should be reported in the current year:
a. Income statement as of P600,000 debit
b. Retained earnings statement as a P600,000 debit adjustment to the beginning balance.
c. Income statement as a P600,000 credit.
d. Retained earnings statement as a P600,000 credit adjustment to the beginning balance.
Assume that Audio Outfitter Inc. in Discussion Question 9 experienced an abnormal inventory shrinkage of $98,600. Audio Outfitter Inc. has decidedto record the abnormal inventory shrinkage so that it would be disclosed separately on the income statement. What account would be debited for theabnormal inventory shrinkage?
Chapter 21 Solutions
Intermediate Accounting
Ch. 21 - Are accounting changes permitted in financial...Ch. 21 - How do firms report accounting changes under the...Ch. 21 - Prob. 21.3QCh. 21 - How do firms account for changes in accounting...Ch. 21 - Prob. 21.5QCh. 21 - Prob. 21.6QCh. 21 - Prob. 21.7QCh. 21 - Prob. 21.8QCh. 21 - Do accounting errors that self-correct within two...Ch. 21 - Does a firm need to correct an error that...
Ch. 21 - Prob. 21.1MCCh. 21 - Prob. 21.2MCCh. 21 - Prob. 21.3MCCh. 21 - Prob. 21.4MCCh. 21 - Prob. 21.5MCCh. 21 - Prob. 21.1BECh. 21 - Prob. 21.2BECh. 21 - Prob. 21.3BECh. 21 - Prob. 21.4BECh. 21 - Change in Accounting Principle, Long-Term...Ch. 21 - Prob. 21.6BECh. 21 - Prob. 21.7BECh. 21 - Prob. 21.8BECh. 21 - Prob. 21.9BECh. 21 - Prob. 21.10BECh. 21 - Prob. 21.11BECh. 21 - Prob. 21.12BECh. 21 - Prob. 21.13BECh. 21 - Prob. 21.14BECh. 21 - Prob. 21.1ECh. 21 - Prob. 21.2ECh. 21 - Prob. 21.3ECh. 21 - Prob. 21.4ECh. 21 - Prob. 21.5ECh. 21 - Prob. 21.6ECh. 21 - Error Analysis and Correction. Feinstein and...Ch. 21 - Prob. 21.8ECh. 21 - Prob. 21.9ECh. 21 - Prob. 21.10ECh. 21 - Prob. 21.1PCh. 21 - Prob. 21.2PCh. 21 - Prob. 21.3PCh. 21 - Prob. 21.4PCh. 21 - Prob. 21.5PCh. 21 - Prob. 21.6PCh. 21 - Prob. 21.7PCh. 21 - Cases Judgment Case Judgment Case: Materiality and...Ch. 21 - Prob. 1FSCCh. 21 - Surfing the Standards: Change in Accounting...Ch. 21 - Prob. 1BCC
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