On December 31, 2021, ECHO Company appropriately changed its inventory valuation method to the FIFO cost method from the average cost method for financial statement and income purposes. The change will result in a P350,000 increase in the beginning inventory on January 1, 2021.

On December 31, 2021, ECHO Company appropriately changed its inventory valuation method to the FIFO cost method from the average cost method for financial statement and income purposes. The change will result in a P350,000 increase in the beginning inventory on January 1, 2021.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter7: Inventories: Cost Measurement And Flow Assumptions

Section: Chapter Questions

Problem 11P: Olson Company adopted the dollar-value LIFO method for inventory valuation at the beginning of 2015....

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Question

Assuming an income tax rate of 30%, how much is the cumulative effect of this change that should be reported in the income statement for the year ended December 31, 2021?

On December 31, 2021, ECHO Company appropriately changed its inventory valuation
method to the FIFO cost method from the average cost method for financial statement and
income purposes. The change will result in a P350,000 increase in the beginning inventory
on January 1, 2021.

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