Prepare the change in accounting policy note for the year

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Reference no: EM133433610

Read the scenario and answer the question that follows:

Alibama Ltd

Alibama Ltd, a manufacturer of consumer goods, values inventory at the lower of cost and net realisable value according to the weighted average method of inventory valuation.

The value of closing inventory at 31 December 2020, 2021 and 2022 was originally computed as follows:

2020 = R472 500
2021 = R262 500
2022 = R495 000
During the year ended 31 December 2022, management decided that inventory should rather be valued on the First-in-first-out (FIFO) basis in order to improve the matching of revenue and expenses.

Closing inventory at 31 December on FIFO:

2020 = R645 000
2021 = R292 500
2022 = R675 000

Required

Prepare the change in accounting policy note for the year ended 31 December 2022. Assume a tax rate of 27%.

Reference no: EM133433610

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