Taveras Co. decides at the beginning of 2014 to adopt the FIFO method of inventory valuation. Taveras
Question:
Other information:
1. For each year presented, sales are $3,000 and operating expenses are $1,000.
2. Taveras provides two years of financial statements. Earnings per share information is not required.
Instructions
(a) Prepare income statements under LIFO and FIFO for 2012, 2013, and 2014.
(b) Prepare income statements reflecting the retrospective application of the accounting change from the LIFO method to the FIFO method for 2014 and 2013.
(c) Prepare the note to the financial statements describing the change in method of inventory valuation. In the note, indicate the income statement line items for 2014 and 2013 that were affected by the change in accounting principle.
(d) Prepare comparative retained earnings statements for 2013 and 2014 under FIFO. Retained earnings reported under LIFO are as follows:
..............................................Retained Earnings Balance
December 31, 2012.............................. $1,200
December 31, 2013................................ 2,200
December 31, 2014................................ 3,070
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
Step by Step Answer:
Intermediate Accounting 2014 FASB Update
ISBN: 978-1118147290
15th edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield