Below are four independent, material and unrelated situations involving accounting changes. Each change occurs during...
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Accounting
Below are four independent, material and unrelated situations involving accounting changes. Each change occurs during 2020 before any adjusting or closing entries were prepared. Assume a tax rate of 40% and any tax effects are adjusted through the deferred tax asset or liability account.
Discuss and evaluate the type of accounting change, briefly describe any steps that should be taken to appropriately report the situation and complete journal entries to
Lindsey Company changed its inventory cost method to LIFO from FIFO at the beginning of 2020 for both financial statement and income tax purposes. Under FIFO, the inventory on January 1, 2020 was estimated to be $18 million. A LIFO reserve at the end of 2020 was calculated to be $1,650,000. document the change.
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