[YouCanDoIt]

Hey all,
Wanted some clarification on when INCOME statement is effect and when B/S is effected:
I wrote out an example, and tried to work it from what I understand SO FAR, but either I m overlooking something, or being slow, because I am not getting some of the pieces. If you can please go over the example, and correct me where I should do something different:

Example: Accounting Principle change: we change our inventory method in year4, and here is the net income below :

OLD NEW CHANGE:
Y1 100 120 +20 K
Y2 120 130 +10 K
Y3 140 180 +40 K
Y4* 150 200 +50 K
For sake of convenience, everything is already net of tax.

We are asked to do COMPARATIVE statement for y3, and y4 ,
I understand I must ADD THE CHANGES from y1+y2= 20+10= 30,000 increase in net income
So we take the 30,000 and put it as 1/1/Y3 BEG. R/E adjustment , correct?

My question is, when do we add anything on the INCOME STATEMENT itself as: “Cumulative Effect of change from X to Y”?
Under what year(s)?

I don’t think I can do BOTH cumulative change + R/E adjustment at the same time, because wouldn’t that cause overlapping, I think.

Year 4: We would do Year 4 with new principle in mind:
Net Income, net of tax presented: $200
No cumulative change on INC. STMT. ?

Year 3: Since, we have to present year3 for comparison:
Income Statement: NI: $180K
Without cumulative change added(?)

R/E Statement:
Beg. R/E ………………………………xx
Add: PY Adjustments……………+ 30k <— Our y1+y2 change due to principle change
Adjusted R/E-Dec,Y2…………….xx+30
Add: Net Income…………………..180
R/E Dec, Y3…………………………180

FAR: 76
REG: Currently studying
AUD:
BEC: