Connors academy reported inventory in the 2017 year-end balance sheet, using the fifo method, as $154,000. in 2018, the company decided to change its inventory method to lifo. if the company had used the lifo method in 2017, the company estimates that ending inventory would have been in the range $130,000-$135,000. what adjustment would connors make for this change in inventory method?

Question

Arjun

Business

7 December, 09:41

Connors academy reported inventory in the 2017 year-end balance sheet, using the fifo method, as $154,000. in 2018, the company decided to change its inventory method to lifo. if the company had used the lifo method in 2017, the company estimates that ending inventory would have been in the range $130,000-$135,000. what adjustment would connors make for this change in inventory method?

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Denzel Villanueva · Answer 1

NONE

Explanation:

The change will not be retrospective but prospective because although accounting standards require that when a company changes accounting methods, it needs to restate its assets and income amounts; in the case of inventory is not practicable.

Adjusting previous years inventory balances from FIFO to LIFO will not be possible, hence there will be no prior-year adjustments