Gamma Corporation has been in business for 6 years as of 2021. Management presents 2-year comparative financial statements. In 2021, Gamma decides to change from FIFO to LIFO for inventory costing. Which of the following statements are true with respect to how Gamma must report this change on its financial statements? I. Re-state both the 2021 and 2020 Income statements. II. Report the change on the 2021 Income Statement only. III. Report the cumulative change in Retained Earnings for 2016-2020 as an adjustment to beginning Retained Earnings on the 2021 Statement of Retained Earnings. IV. Report the cumulative change in Retained Earnings for 2016-2019 as an adjustment to beginning Retained Earnings on the 2020 re-stated Statement of Retained Earnings. V. Adjust the carrying amount of Inventory on the 2021 Balance Sheet. OI and IV O II, III, and V O I, IV, and V OI and III
Gamma Corporation has been in business for 6 years as of 2021. Management presents 2-year comparative financial statements. In 2021, Gamma decides to change from FIFO to LIFO for inventory costing. Which of the following statements are true with respect to how Gamma must report this change on its financial statements? I. Re-state both the 2021 and 2020 Income statements. II. Report the change on the 2021 Income Statement only. III. Report the cumulative change in Retained Earnings for 2016-2020 as an adjustment to beginning Retained Earnings on the 2021 Statement of Retained Earnings. IV. Report the cumulative change in Retained Earnings for 2016-2019 as an adjustment to beginning Retained Earnings on the 2020 re-stated Statement of Retained Earnings. V. Adjust the carrying amount of Inventory on the 2021 Balance Sheet. OI and IV O II, III, and V O I, IV, and V OI and III
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
Chapter18: Accounting For Income Taxes
Section: Chapter Questions
Problem 9MC: Brooks Company reported a prior period adjustment of 512,000 in pretax financial "income" and...
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