Bramble Co. decides at the beginning of 2020 to adopt the FIFO method of inventory valuation. Bramble had used the LIFO method for financial reporting since its inception on January 1, 2018, and had maintained records adequate to apply the FIFO method retrospectively. Bramble concluded that FIFO is the preferable inventory method because it reflects the current cost of inventory on the balance sheet. The following table presents the effects of the change in accounting principles on inventory and cost of goods sold. Income taxes are ignored. Date January 1, 2018 December 31, 2018 December 31, 2019 December 31, 2020 Inventory Determined by LIFO Method $0 100 200 350 FIFO Method $0 8 220 410 Cost of Goods Sold Determined by LIFO Method $0 800 940 1,100 FIFO Method $0 892 828 1,060
Bramble Co. decides at the beginning of 2020 to adopt the FIFO method of inventory valuation. Bramble had used the LIFO method for financial reporting since its inception on January 1, 2018, and had maintained records adequate to apply the FIFO method retrospectively. Bramble concluded that FIFO is the preferable inventory method because it reflects the current cost of inventory on the balance sheet. The following table presents the effects of the change in accounting principles on inventory and cost of goods sold. Income taxes are ignored. Date January 1, 2018 December 31, 2018 December 31, 2019 December 31, 2020 Inventory Determined by LIFO Method $0 100 200 350 FIFO Method $0 8 220 410 Cost of Goods Sold Determined by LIFO Method $0 800 940 1,100 FIFO Method $0 892 828 1,060
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter7: Inventories: Cost Measurement And Flow Assumptions
Section: Chapter Questions
Problem 11P: Olson Company adopted the dollar-value LIFO method for inventory valuation at the beginning of 2015....
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