On December 31, 2020, Fire Corporation appropriately changed its inventory costing method from FIFO cost to weighted average cost method for financial statement and income tax purposes. The change will result in a P700,000 decrease in the beginning inventory of January 1, 2020. Assume a 30% income tax rate. The amount of adjustment to the January 1, 2020 balance of retained earnings is: P490,000 addition P700,000 addition P490,000 deduction P700,000 deduction
On December 31, 2020, Fire Corporation appropriately changed its inventory costing method from FIFO cost to weighted average cost method for financial statement and income tax purposes. The change will result in a P700,000 decrease in the beginning inventory of January 1, 2020. Assume a 30% income tax rate. The amount of adjustment to the January 1, 2020 balance of retained earnings is: P490,000 addition P700,000 addition P490,000 deduction P700,000 deduction
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
Chapter22: Accounting For Changes And Errors.
Section: Chapter Questions
Problem 3MC
Related questions
Question
- On December 31, 2020, Fire Corporation appropriately changed its inventory costing method from FIFO cost to weighted average cost method for financial statement and income tax purposes. The change will result in a P700,000 decrease in the beginning inventory of January 1, 2020. Assume a 30% income tax rate. The amount of adjustment to the January 1, 2020 balance of
retained earnings is:- P490,000 addition P700,000 addition
- P490,000 deduction P700,000 deduction
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning