The following information are provided to you regarding the financial statements of Susan Co.:

In December 31, 2020, management decided that provision for inventory obsolescence needs to be increased by P1,500,000. If the same basis of calculating inventory was applied in the previous year, the provision in 2019 should have been P700,000 higher than the amount recognized in the statement of comprehensive income.

Determine:

(1) Effect of the change in net income of 2020 (if overstatement, enclose your answer in parentheses or add a negative sign)

(2) Effect of the change in beginning retained earnings of 2020 (if overstatement, enclose your answer in parentheses or add a negative sign)

In 2019, A. Shaw Company used FIFO to in measuring its inventories. The Company decided to change to Weighted Average costing at the start of 2020.

Additionally, the following information is provided to you:

	2020	2019
Inventory, 12/31 FIFO	5,400,000	4,800,000
Inventory, 12/31 WA	6,100,000	4,570,000

If the net income of A. Shaw in 2020 is P2,500,000 under FIFO, how much should be the net income under the revised policy?

As of December 31, 2019, R. Brix Enterprises had the following properties in its books:

	Cost	Accumulated Depreciation
Building	5,000,000	960,000
Machinery	4,000,000	600,000

The building had a salvage value of P200,000. Both properties were being depreciated using the straight-line method of accounting and had an original useful life of 10 years each.

On January 1, 2020, the company decided to use SYD method to depreciate the building. In addition, the machinery was re-evaluated to have a useful life of 4 years.

How much is the depreciation in 2020 (round to nearest whole figure)?

Gene Company discovered the following errors in the 2018 and 2019, resulting in the understatement of each year's net income by P250,000 and P100,000, respectively, net of tax.

In 2020, net income is correctly reported at P800,000.

As of the following dates, the company had the following figures:

	2018	2019
Net Income	540,000	499,000
Beginning retained earnings	2,400,000	2,940,000

There were no other movements in retained earnings apart from the result of operations during the periods.

Determine the amount of reported retained earnings on the December 31, 2020 statement of financial position.

Answer rating: 100% (QA)

I Effect of Provision in 2019 150000000 Effect of Provision in 2020 70000000 220000000 The net incom... View the full answer