just question E20-6

1198 SECTION.4 E 20-5 FASB codificatiti research; change inaccOuntlng for Additional Financial Reporting Issues Companies Often invest in the common stock Of other corporations. The way we report these inveslmenls on the nature of the investment and the investor's motivation for the investment. The FASB Accountine Coditiearinn represents the single source Of authoritative U.S. generally accepted accounting principle'y the relevant authoritative literature on the disclosure of accounting policies using the FASB Accounting Stand,'i,:, investments e L0202 DE E 206 FASB codification research L020-2 DE E 20-7 Change in principle: change in inventory cost method L020-2 c , Codification at the FASB website (www.fasb.org). Requ i red: l. What is the specific nine-digit Codification citation (XXXXX-XVXX) that describes how to account change in the level of ownership to a percentage that will mandate use Of the equity method for investments common stock? 2. What are the specific requirements? Access the FASB Accounting Standards Codification at the FASB website (www.fasb.org). Determine thc cific eight-digit Codification citation (XXX-XX-XX-X) for accounting tor each ol- the following items: J. Reporting most changes in accounting principle. 2. Disclosure requirements for a change in accounting principle. "3. Illustration Of the application of a retrospective change in the method of accounting tor inventory. Millinkton Materials is a leading supplier of building equipment. building products, materials, and timber t-or sale. with over branches across the Mid-South. On January I . 2021 , management decided to change from the avel- age inventory costing method to the FIFO inventory costing method at each of its outlets. The following table presents infOrmation concerning the change. The income tax rate all years is 2.5% Before 2020 2020 2021 Required: FIFO $30 million 16 million 20 million Income before Income Tax Average Cost $16 million 10 million 18 million Difference $14 million 6 million 2 million Prepare the journal entry to record the change in accounting principle. 2. Determine the net incomeno be reported in the 20212020 comparative income statements.