Requirements $($based on IFRS$)$:

a$.$ Prepare the journal entry necessary to record a change from the average$-$cost method to the FIFO method in $2023.$ Show all workings b$.$ Determine net income to be reported for $2020,2021$ and $2022,$ after giving effect to the change in accounting policy.

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Toolum Corporation began operations on January 1, 2020, and uses the average- cost method of pricing inventory. Management is contemplating a change in inventory methods for 2023. The following information is available for the years 2020-2022 Net Income using Average Cost Method 2020 20,000 2021 15,000 2022 25,000 FIFO Method 22,000 20,000 30,000 Toolum Corporation began operations on January 1, 2020, and uses the average- cost method of pricing inventory. Management is contemplating a change in inventory methods for 2023. The following information is available for the years 2020-2022 Net Income using Average Cost Method 2020 20,000 2021 15,000 2022 25,000 FIFO Method 22,000 20,000 30,000