FAR Questions

  • Creator
    Topic
  • August 16, 2021 at 9:31 am #3305462
    Ray
    Participant

    Hi all,

    Can someone please advise on the correct treatement for the below two questions.

    Question 1
    Inventory method was FIFO in year 2020 but changed to LIFO in 2021. How should this change be handled?
    Accounting error, Change in principle, or prior period adjustment?
    Prospectively or Retrospectively?
    Should Retained Earnings be restated?

    Question 2
    Inventory was understated in 2020 but correctly stated in the end of 2021. What effects does it have on Net income and retained earnings in 2021?

    Thank you,
    Wiz

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