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What adjustment should be made to the net income

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Reference no: EM132958944

Question - Please help me with this problem as I am having a hard time with it and kindly include how you got the answer in good accounting form:

In reviewing the draft financial statements for the year ended December 31, 2020, Birkin Company decided that market conditions were such that the provision for inventory obsolescence on December 31, 2020, should be increased by P3,000,000.

If the same basis of calculating inventory obsolescence had been applied on December 31, 2019, the provision would have been P1,800,000 higher than the amount recognized in the statement of comprehensive income.

1. What adjustment should be made to the income of 2020?

2. What adjustment should be made to the net income of 2019 presented as a comparative figure in the 2020 financial statements?

Reference no: EM132958944

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