Answered: reason for the FASB changing the…

Business

Accounting

reason for the FASB changing the accounting method for reporting lower-of-cost-or-market

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter10: Inventory

Section: Chapter Questions

Problem 12MC: Which of the following financial statements would be impacted by a current-year ending inventory...

See similar textbooks

Related questions

Q: Goddard Company has used the FIFO method of inventory valustion since it began operations in 2018.…

A: Introduction: A journal entry is a form of accounting entry where the transactions are being…

Q: 1. What are the main differences between perpetual and periodic inventory systems regarding…

A: Cost of Goods Sold: Cost of goods sold is the conveying worth of products sold during a specific…

Q: Waterway Company began operations on January 1, 2018, and uses the average-cost method of pricing…

A: Given: - For 2018: Average cost method=$16,110 FIFO method=$18,880 LIFO method=$12,030 For 2019:…

Q: If Wrecking Ball uses a periodic inventory system, the cost of the inventory using the periodic…

A: Introduction: Average cost method is one of the method of inventory valuation. While applying…

Q: Sugarbaker Designs, Inc., changed from the FIFO inventory costing method to the average cost method…

Q: During 2016, WMC Corporation discovered that its ending inventories reported on its financial…

A: 1.

Q: In 2018, the Barton and Barton Company changed its method of valuing inventory from the FIFO method…

Q: a. Prepare income statements under average-cost and FIFO for 2017, 2018, and 2019.

A: Since you have posted multiple question , we will do the first one for you . In order to get…

Q: The following information is presented for Bramble Corporation. The net income figures were computed…

A: Understatement or overstatement of inventory directly impacts the amount of reported net income for…

Q: It is discovered in 2016 that ending inventory in 2014 was understated. What is the effect of the…

A: The effect of the understatement in 2014 on: Cost of goods sold: The understated ending inventory…

Q: BTS, Inc. has adopted a new accounting system for measuring the value of its inventory from weighted…

A: Lets understand the basics. There are two types of changes happens in the accounting which are, (1)…

Q: On December 31, 2018, Stevenson Company overstated ending inventory by $36,000. How does this error…

A: Cost of goods sold: Cost of goods sold is the total of all the expenses incurred by a company to…

Q: If merchandise inventory is understated at the end of 2015, and the error is not discovered, how…

Q: Southeast Steel, Inc., changed from the FIFO inventory costing method to the LIFO method during…

A: Changes in accounting principle: A company switches from one accounting method to another accounting…

Q: In 2018, Hopyard Lumber changed its inventory method from LIFO to FIFO. Inventory at the end of2017…

Q: Goddard Company has used the FIFO method of inventory valuation since it began operations in 2013.…

A: Method of Inventory: Inventory refers to the current assets that a company expects to sell during…

Q: Dover Company began operations in 2015 and determined its ending inventory at cost and at a LCNRV at…

A: c) Under both the methods, the same amount has been adjusted against either cost of goods sold /loss…

Q: Required a. Assume that Chen uses the first-in, first-out method. Compute the cost of goods sold for…

A: Hi student Since there are multiple sub parts in this question, we will answer only first three sub…

Q: According to GM’s inventory note, a LIFO liquidation occurred in 2003. Explain what this represents.…

A: LIFO Liquidation When LIFO reserve decline from prior period indicated LIFO Liquidation.US GAAP…

Q: Requirements Assume that the ending merchandise inventory was accidentally overstated by $1,800.…

A: Cost of goods sold: Cost of goods sold is defined as the cost incurred by the company in respect of…

Q: Corrs Company began operations in 2016 and determined its ending inventory at cost and at…

A: Following is the answer to given question

Q: (General Inventory Issues) In January 2017, Susquehanna Inc. requested and secured permission from…

A: (a) Why should inventories be included in (1) a balance sheet and (2) the computation of net income?…

Q: What is the effect of a $51000 overstatement of last year's inventory on current years ending…

A: When there is overstatement of ending inventory occurs, the costs of goods sold (COGS) are stated…

Q: (Change in Principle—Inventory Methods) Holder-Webb Company began operations on January 1, 2015, and…

A: Inventory method: It can be defined as the way of determining the valuation of the inventory while…

Q: Goddard Company has used the FIFO method of inventory valuation since it began operations in 2018.…

A: Method of Inventory: Inventory refers to the current assets that a company expects to sell during…

Q: It is discovered in 2018 that ending inventory in 2016 was understated. What is the effect of the…

A: Inventory error: Inventory errors are sometimes caused by making mistake in physical count, in…

Q: Southeast Steel, Inc., changed from the FIFO inventory costing method to the LIFO method during…

Q: What is the relationship of inventory at the beginning of year 2022 to net income for the year 2022?…

A: Inventory at the end of one accounting period becomes Opening inventory for the next accounting…

Q: The Playa Company uses a periodic inventory system. The following information is taken from Playa's…

A: Compute missing number for 2016, 2017 and 2018 using the below mentioned formulas:

Q: The following information is presented for Marigold Corporation. The net income figures were…

A: Rectification of Error in Books of Accounts: Incorrect amount is reversed and correct amount will…

Q: Sheffield Company began operations on January 1, 2018, and uses the average-cost method of pricing…

A: (a) Prepare the journal entry necessary to record a change from the average cost method to the FIFO…

Q: During 2016, WMC Corporation discovered that its ending inventories reported in its financial…

A: 1.The effects of inventory error of understated ending inventory of $200,000 in 2014.In the year…

Q: The management of Gresa Inc. is reevaluating the appropriateness of using its present inventory cost…

Q: At December 31, 2018, Stevenson Company overstated ending inventory by $36,000. How does this error…

A: Cost of goods sold: Cost of goods sold is the total of all the expenses incurred by a company to…

Q: In 2016, Hopyard Lumber changed its inventory method from LIFO to FIFO. Inventory at the end of 2015…

A: Describe the steps that Company H should take to report this changeThe steps that Company H should…

Q: Sugarbaker Designs Inc. changed from the FIFO inventory costing method to the average cost method…

A: FIFO (first in first out) costing method is an inventory method that assumes that inventory…

Q: 1. In 2021, Jules Company realized that its ending inventory was understated byP1,500 in 2019. How…

A: Since you have asked multiple questions, we will solve the first question for you . If you want any…

Question

What was the reason for the FASB changing the accounting method for reporting lower-of-cost-or-market inventory in 2015?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Update to the accounting standard on inventory in 2015 by FASB

VIEW

Reasons for changing the accounting method in 2015

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Similar questions

Effects of Inventory Costing Methods Refer to the information for Tyler Company above. Required: 1. Which inventory costing method produces the highest amount for net income? 2. Which inventory costing method produces the lowest amount for taxes? 3. Which inventory costing method produces the highest amount for ending inventory? 4. How would your answers to Requirements 1-3 change if inventory prices declined during the period?
If a group of inventory items costing $15,000 had been omitted from the year-end inventory count, what impact would the error have on the following inventory calculations? Indicate the effect (and amount) as either (a) none, (b) understated $______, or (c) overstated $______. Table 10.1
Company Elmira reported the following cost of goods sold but later realized that an error had been made in ending inventory for year 2021. The correct inventory amount for 2021 was 32,000. Once the error is corrected, (a) how much is the restated cost of goods sold for 2021? and (b) how much is the restated cost of goods sold for 2022?
Southeast Steel, Inc., changed from the FIFO inventory costing method to the LIFO method during 2015. How would this change likely be reported in the 2016 comparative financial statements?
Sugarbaker Designs, Inc., changed from the FIFO inventory costing method to the average cost method during 2016. Which items from the 2015 financial statements should be restated on the basis of the average cost method when reported in the 2016 comparative financial statements?
Sugarbaker Designs Inc. changed from the FIFO inventory costing method to the average cost method during2018. Which items from the 2017 financial statements should be restated on the basis of the average cost methodwhen reported in the 2018 comparative financial statements?
Southeast Steel, Inc., changed from the FIFO inventory costing method to the LIFO method during 2017. Howwould this change likely be reported in the 2018 comparative financial statements?
If merchandise inventory is understated at the end of 2015, and the error is not discovered, how will net income be affected in 2016?
It is discovered in 2016 that ending inventory in 2014 was understated. What is the effect of the understatement on the following: Questions For Review of Key Topics 2014: Cost of goods sold Net income Ending retained earnings 2015: Net purchases Cost of goods sold Net income Ending retained earnings
It is discovered in 2018 that ending inventory in 2016 was understated. What is the effect of the understatementon the following: 2016: Cost of goods soldNet incomeEnding retained earnings2017: Net purchasesCost of goods soldNet incomeEnding retained earnings
BTS, Inc. has adopted a new accounting system for measuring the value of its inventory from weighted average method (which they used from start of operations in 2017 until 2019) to first-in, first-out method (which they will use starting 2020). In year 2020, how will BTS, Inc. account for the change in its cost formula? A.Treated as change in accounting estimate with a retrospective adjustment for years 2017 to 2019 B.An entry will not be necessary since past is past. C.Treated as change in accounting policy with an adjustment in Retained Earnings during 2020 D.Treated as change in accounting policy which will only affect year 2020 and onwards
If merchandise inventory is understated at the end of 2017, and the error is not discovered, how will net incomebe affected in 2018?