Wolfgang Kitchens has always used the FIFO inventory costing method for both financial reporting and tax purposes.
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Question:
Wolfgang Kitchens has always used the FIFO inventory costing method for both financial reporting and tax purposes. At the beginning of Wolfgang decided to change to the LIFO method. Net income in was correctly stated as $ million. If the company had used LIFO in its cost of goods sold would have been higher by $ million that year. Company accountants are able to determine that the cumulative net income for all years prior to would have been lower by $ million if LIFO had been used all along, but have insufficient information to determine specific effects of using LIFO in Last year, Wolfgang reported the following net income amounts in its comparative income statements:
$ in millions
Net income $ $ $
Required:
Prepare the journal entry at the beginning of to record the change in accounting principle. Ignore income taxes.
What amounts will Wolfgang report for net income in its comparative income statements?
Related Book For
Intermediate Accounting
ISBN: 9781259722660
9th Edition
Authors: J. David Spiceland, James Sepe, Mark Nelson, Wayne Thomas
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