Richelle Company adapted the following changes during 2022: • Appropriately changed to the FIFO cost method from the weighted-average cost method for financial statement and income tax purposes. The change will result in a P444,500 increase in the beginning inventory at January 1, 2022. • Changed its method of accounting for bad debts from the direct write-off method to the allowance method. The company's controller determined that an allowance of P275,950 should be established on that date. • Due to technological changes, depreciable assets will have lower residual values than were originally expected. Analysis shows that depreciation in prior years was understated by P224,050.

Richelle Company adapted the following changes during 2022: • Appropriately changed to the FIFO cost method from the weighted-average cost method for financial statement and income tax purposes. The change will result in a P444,500 increase in the beginning inventory at January 1, 2022. • Changed its method of accounting for bad debts from the direct write-off method to the allowance method. The company's controller determined that an allowance of P275,950 should be established on that date. • Due to technological changes, depreciable assets will have lower residual values than were originally expected. Analysis shows that depreciation in prior years was understated by P224,050.

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

Chapter18: Accounting For Income Taxes

Section: Chapter Questions

Problem 9MC: Brooks Company reported a prior period adjustment of 512,000 in pretax financial "income" and...

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