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had used the FIFO method of inventory valuation since it began operations in 2017 CPA Co. decided to change to the weighted average method for determining inventory costs at the beginning of 2019. The following schedule shows year-end inventory balances under FIFO and weighted average method. Weighted Average 5,400,000 7,100,000 7,800,000 Year 2017 FIFO 4,500,000 7,800,000 8,300,000 2018 2019 Assuming the income tax rate is 30%, what amount should be reported in the 2020 Statement of Changes in Equity as the cumulative effect of this accounting change? Indicate whether debit or credit

had used the FIFO method of inventory valuation since it began operations in 2017 CPA Co. decided to change to the weighted average method for determining inventory costs at the beginning of 2019. The following schedule shows year-end inventory balances under FIFO and weighted average method. Weighted Average 5,400,000 7,100,000 7,800,000 Year 2017 FIFO 4,500,000 7,800,000 8,300,000 2018 2019 Assuming the income tax rate is 30%, what amount should be reported in the 2020 Statement of Changes in Equity as the cumulative effect of this accounting change? Indicate whether debit or credit

Intermediate Accounting: Reporting And Analysis
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 12P: Dollar-Value LIFO Kwestel Company adopted the dollar-value LIFO method for inventory valuation at...
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Problem 2 CPA Co. had used the FIFO method of inventory valuation since it began operations in 2017. CPA Co. decided to change to the weighted average method for determining inventory costs at the beginning of 2019. The following schedule shows year-end inventory balances under FIFO and weighted average method. Weighted Average 5,400,000 7,100,000 7,800,000 Year 2017 FIFO 2018 2019 4,500,000 7,800,000 8,300,000 Assuming the income tax rate is 30%, what amount should be reported in the 2020 Statement of Changes in Equity as the cumulative effect of this accounting change? Indicate whether debit or credit.
Transcribed Image Text:Problem 2 CPA Co. had used the FIFO method of inventory valuation since it began operations in 2017. CPA Co. decided to change to the weighted average method for determining inventory costs at the beginning of 2019. The following schedule shows year-end inventory balances under FIFO and weighted average method. Weighted Average 5,400,000 7,100,000 7,800,000 Year 2017 FIFO 2018 2019 4,500,000 7,800,000 8,300,000 Assuming the income tax rate is 30%, what amount should be reported in the 2020 Statement of Changes in Equity as the cumulative effect of this accounting change? Indicate whether debit or credit.
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