Question: On January 1, 2011, Roem Corp. changed its inventory method to FIFO from LIFO for both financial and income tax reporting purposes. The change resulted

On January 1, 2011, Roem Corp. changed its inventory method to FIFO from LIFO for both financial and income tax reporting purposes. The change resulted in a $500,000 increase in the January 1, 2011 inventory, which is the only change that could be calculated from the accounting records.

Assume that the income tax rate for all years is 30%. Retrospective application would result in

a. An increase in ending inventory in the 2010 balance sheet.

b. A decrease in ending inventory in the 2011 balance sheet.

c. A decrease in net income in 2010.

d. A gain from cumulative effect of change on the income statement in 2011.

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Model Based Testing For Embedded Systems Questions!

Q:

On January 1, 2011, Roem Corp. changed its inventory method to FIFO from LIFO for both financial and income tax reporting purposes. The change resulted in a $500,000 increase in the January 1, 2011...

Q:

On January 1, 2010, Roem Corp. changed its inventory method to FIFO from LIFO for both financial and income tax reporting purposes. The change resulted in a 500,000 increase in the January 1, 2010...

Q:

On January 1, 2010, Roem Corp. changed its inventory method to FIFO from LIFO for both financial and income tax reporting purposes. The change resulted in a 500,000 increase in the January 1, 2010...

Q:

On January 1, 2010, Roem Corp. changed its inventory method to FIFO from LIFO for both financial and income tax reporting purposes. The change resulted in a 500,000 increase in the January 1, 2010...

Q:

On January 1, 2010, Roem Corp. changed its inventory method to FIFO from LIFO for both financial and income tax reporting purposes. The change resulted in a 500,000 increase in the January 1, 2010...

Q:

On January 1, 2010, Roem Corp. changed its inventory method to FIFO from LIFO for both financial and income tax reporting purposes. The change resulted in a 500,000 increase in the January 1, 2010...

Q:

On January 1, 2010, Roem Corp. changed its inventory method to FIFO from LIFO for both financial and income tax reporting purposes. The change resulted in a 500,000 increase in the January 1, 2010...

Q:

On January 1, 2010, Roem Corp. changed its inventory method to FIFO from LIFO for both financial and income tax reporting purposes. The change resulted in a 500,000 increase in the January 1, 2010...

Q:

On January 1, 2010, Roem Corp. changed its inventory method to FIFO from LIFO for both financial and income tax reporting purposes. The change resulted in a 500,000 increase in the January 1, 2010...

Q:

On January 1, 2010, Roem Corp. changed its inventory method to FIFO from LIFO for both financial and income tax reporting purposes. The change resulted in a 500,000 increase in the January 1, 2010...

Q:

Shenzhen Co uses the percentageofreceivables basis to record bad debt expense It estimates that 1 of accounts receivable will become uncollectible Accounts receivable are 420,000 at the end of the...

Q:

A manufacturer of bolts has a quality- control policy that requires it to destroy any bolts that are more than 2 standard deviations from the mean. The quality-control engineer knows that the bolts...

Q:

In Canada, Net rental income is not included in RRSP earned income or child care earned income. Question 6 options: TrueFalse

Q:

What steps could a company take to avoid making product design and marketing mistakes when introducing new products into East Germany? How would you go about hiring a plant manager for a facility you...