Reference no: EM133150492

Question 1 - On December 31, 2022, Michael Co. appropriately changed its inventory valuation method to FIFO cost from weighted-average cost for financial statement and income tax purposes. The change will result in a P3,620,000 increase in the beginning inventory at January 1, 2022. Assume a 25% income tax rate. The cumulative effect of this accounting change on beginning retained earnings is? Indicate whether Increase or Decrease.

Question 2 - On January 1, 2022, Chryzza Co. acquired an equipment for P16,500,000. The equipment will be depreciated using the straight-line method over 25 years. The estimated residual value is P500,000. In 2028, following a reassessment of the realization of the expected economic benefits from the equipment, Chryzza Co. changed its depreciation method to sum-of-the-years digits (SYD). The remaining useful life of the asset is estimated to be 9 years and the residual value is changed to P340,000. How much is the depreciation expense in 2028?