FASB ASC Topic 250 (Presentation-Accounting Changes and Error Corrections,requires that voluntary changes in accounting principles be reported retrospectively.The standard recognizes that such retrospective restatement is not always practical.
Required:
1.Explain how a company would report a change from FIFO method of inventory costing to the LIFO method under ASC Topic 250.
2.Suppose a company has some,but not all,of the information needed to account for a change retrospectively.As an example,a company changes to the LIFO inventory method on January 1,2014.Management has information that would allow it to revise all assets and liabilities based on the newly adopted method for 2013 in its comparative financial statements,but not for 2012.Explain how this change would be reported under the circumstances described.
3.Suppose a company does not have the information necessary to retrospectively adjust retained earnings,but does have information available to revise all assets and liabilities for one or more specific years.As an example,a company changes to the LIFO inventory method on January 1,2014.The required records of inventory purchases and sales for some previous years are not available.The company does have the information required to apply the LIFO method on a prospective basis beginning in 2012.Explain how this change would be reported under the circumstances described.

Question

Quizplus · Accepted Answer

The Answer of FASB ASC Topic 250 (Presentation-Accounting Changes and Error Corrections,requires that voluntary changes in accounting principles be reported retrospectively.The standard recognizes that such retrospective restatement is not always practical.
Required:
1.Explain how a company would report a change from FIFO method of inventory costing to the LIFO method under ASC Topic 250.
2.Suppose a company has some,but not all,of the information needed to account for a change retrospectively.As an example,a company changes to the LIFO inventory method on January 1,2014.Management has information that would allow it to revise all assets and liabilities based on the newly adopted method for 2013 in its comparative financial statements,but not for 2012.Explain how this change would be reported under the circumstances described.
3.Suppose a company does not have the information necessary to retrospectively adjust retained earnings,but does have information available to revise all assets and liabilities for one or more specific years.As an example,a company changes to the LIFO inventory method on January 1,2014.The required records of inventory purchases and sales for some previous years are not available.The company does have the information required to apply the LIFO method on a prospective basis beginning in 2012.Explain how this change would be reported under the circumstances described.

FASB ASC Topic 250 (Presentation-Accounting Changes and Error Corrections,requires That