Question: Most accounting principles are recorded and reported retrospecti
Most accounting principles are recorded and reported retrospectively. In a few situations, though, the changes should be reported prospectively. When is prospective application appropriate? Provide examples.
Answer to relevant QuestionsSoutheast Steel, Inc., changed from the FIFO inventory costing method to the LIFO method during 2010. How would this change likely be reported in the 2011 comparative financial statements?If merchandise inventory is understated at the end of 2010, and the error is not discovered, how will net income be affected in 2011?In 2011, Dorsey Markets changed its method of valuing inventory from the FIFO method to the LIFO method. At December 31, 2010, Dorsey's inventories were $96 million (FIFO). Dorsey's records were insufficient to determine ...In 2011, the internal auditors of Development Technologies, Inc. discovered that (a) 2010 accrued wages of $2 million were not recognized until they were paid in 2011 and (b) A $3 million purchase of merchandise in 2011 was ...Wolfgang Kitchens has always used the FIFO inventory costing method for both financial reporting and tax purposes. At the beginning of 2011, Wolfgang decided to change to the LIFO method. Net income in 2011 was correctly ...
Post your question