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What adjustment should be made to net income

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Question - Lego Company has used the FIFO method since it began operations in 2023. Lego changed to the weighted average method in 2026. The change was justified. In its 2026 financial statements, Lego included comparative statements for 2025 and 2024. The following are the year-end inventory balances under the FIFO and weighted average methods.

Year FIFO Weighted Average

2023 $90,000 $108,000

2024 $150,000 $132,000

2025 $168,000 $145,000

Required - What adjustment should be made to Net Income retrospectively for the year ended December 31, 2025?

a. $23,000 decrease

b. $36,000 increase

c. $41,000 increase

d. $5,000 decrease

e. $42,000 decrease

Reference no: EM132617191

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