On January 1, 2021, Blossom Corp. changed its inventory method to FIFO from LIFO for both financial and income tax reporting purposes. The change resulted in a $910000 increase in the January 1, 2021 inventory. Assume that the income tax rate for all years is 30%. Assuming that comparative statements are not issued, the cumulative effect of the accounting change should be reported by Blossom in its 2021 income statement as a $637000 cumulative effect of accounting change. retained earnings statement as a $910000 addition to the beginning balance. retained earnings statement as a $637000 addition to the beginning balance. income statement as a $910000 cumulative effect of accounting change.
On January 1, 2021, Blossom Corp. changed its inventory method to FIFO from LIFO for both financial and income tax reporting purposes. The change resulted in a $910000 increase in the January 1, 2021 inventory. Assume that the income tax rate for all years is 30%. Assuming that comparative statements are not issued, the cumulative effect of the accounting change should be reported by Blossom in its 2021 income statement as a $637000 cumulative effect of accounting change. retained earnings statement as a $910000 addition to the beginning balance. retained earnings statement as a $637000 addition to the beginning balance. income statement as a $910000 cumulative effect of accounting change.
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
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On January 1, 2021, Blossom Corp. changed its inventory method to FIFO from LIFO for both financial and income tax reporting purposes. The change resulted in a $910000 increase in the January 1, 2021 inventory. Assume that the income tax rate for all years is 30%. Assuming that comparative statements are not issued, the cumulative effect of the accounting change should be reported by Blossom in its 2021
income statement as a $637000 cumulative effect of accounting change.
retained earnings statement as a $637000 addition to the beginning balance.
income statement as a $910000 cumulative effect of accounting change.
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