Comet company began operations in 2010 and adopted the fifo

Reference no: EM13587551

Comet Company began operations in 2010 and adopted the FIFO method of inventory pricing. During 2012, Comet Company decided to change its method of inventory pricing from FIFO to weighted-average. Using FIFO, Comet's pretax income during 2010, 2011, and 2012 was $395,000, $430,000, and $450,000, respectively. Under the weighted-average method, however, pretax income in each year decreases to $370,000, $390,000, and $410,000, respectively.

Assume that the 2012 financial statements reflect the current change in accounting principle and that the company reports only the 2012 results in its financial statements (e.g. this is the earliest year presented). The company is taxed at a 35% tax rate. What amount will be reported as an adjustment to the beginning balance of retained earnings in 2012 to reflect the change in accounting principle?

Image text transcribed for accessibility Comet Company began operations in 2010 and adopted the FIFO method of inventory pricing. During 2012, Comet Company decided to change its method of inventory pricing from FIFO to weighted-average. Using FIFO, Comet's pretax income during 2010, 2011, and 2012 was $395,000, $430,000, and $450,000, respectively. Under the weighted-average method, however, pretax income in each year decreases to $370,000, $390,000, and $410,000, respectively. Assume that the 2012 financial statements reflect the current change in accounting principle and that the company reports only the 2012 results in its financial statements (e.g. this is the earliest year presented). The company is taxed at a 35% tax rate. What amount will be reported as an adjustment to the beginning balance of retained earnings in 2012 to reflect the change in accounting principle?

Reference no: EM13587551

Questions Cloud

From the foregoing information prepare an income statement : the financial records of leroi jones inc. were destroyed by fire at the end of 2014. fortunately the controller had

The activation energy for the reaction no2gco2g----gtnogcog : the activation energy for the reaction no2gco2g----gtnogcog is ea 325 kjmol and the change in enthalpy for the reaction

Discuss the three major species of staphylococcus explain : discuss the three major species of staphylococcus. explain why one of them is more pathogenic compared to the other

Simplify the expression using the double-angle or : 1.simplify the expression using the double-angle or half-angle formula3sin theta8 cos theta82. find sinx2 cosx2 and tan

Comet company began operations in 2010 and adopted the fifo : comet company began operations in 2010 and adopted the fifo method of inventory pricing. during 2012 comet company

Explain what is meant by indicator organisms when testing a : explain what is meant by indicator organisms when testing a water sample. what are the media used to determine the

At the beginning of its 2010 calendar-year accounting : at the beginning of its 2010 calendar-year accounting period abc inc. had retained earning of 1500000. during 2010 abc

What is the partial pressure of nitrogen in a container : what is the partial pressure of nitrogen in a container that contains 3.96mol of oxygen 7.49 mol of nitrogen and 1.19

Prepare the income tax expense section of the income : part ii goody inc. has no deferred tax asset or liability prior to 2010. its pretax financial income for 2010 and 2011

User Account

All Pages