Sugarbaker Designs, Inc., changed from the FIFO inventory costing method to the average cost method during 2011. Which items from the 2010 financial statements should be restated on the basis of the average cost method when reported in the 2011 comparative financial statements?
Answer to relevant QuestionsMost 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.Describe the process of correcting an error when it's discovered in a subsequent reporting period.In 2011, DeWash Industries changed its method of valuing inventory from the average cost method to the FIFO method. At December 31, 2010, DeWash's inventories were $47.6 million (average cost). DeWash's records indicated ...In 2011, internal auditors discovered that PKE Displays, Inc. had debited an expense account for the $350,000 cost of a machine purchased on January 1, 2008. The machine's useful life was expected to be five years with no ...Moulton Foods has always used the FIFO inventory costing method for both financial reporting and tax purposes. At the beginning of 2011, Moulton decided to change to the LIFO method. As a result of the change, net income in ...
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