On January 1, Year 3, a company changed its inventory costing method from LIFO to FIFO. The company’s Year 3 financial statement

Question

3 years ago

6

On January 1, Year 3, a company changed its inventory costing method from LIFO to FIFO. The company’s Year 3 financial statement

s contain comparative information for Year 2. How should the company present the Year 2 effect of the change in accounting principle in its Year 3 comparative financial statements?

Business

1 answer:

kherson [118] · Answer 1 · 2022-09-25T06:56:06+03:00

Answer:

The result generated by the method change must be expressed within the income statement as an extraordinary result.

And within the statement of financial situation, a note must be included where the change of method is reported and what the valuation of the inventory would have been if the method had not been changed.