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  1. business
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  3. costko corp. reported net income of $1,000,000 and

CostKo Corp. reported net income of $1,000,000 and $1,100,000 in Year 1 and Year 2,...

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Accounting

CostKo Corp. reported net income of $1,000,000 and $1,100,000 in Year 1 and Year 2, respectively. In Year 3(the current year), the company changed its method of accounting for inventory from weighted average to FIFO (first-in, first-out). As a result of using the new method (FIFO), net income would have been $1,100,000 and $1,302,000 in Year 1 and Year 2, respectively.
a. Classify the accounting change. Answer 1
Change in accounting principle
b. Determine the proper accounting approach. Answer 2
Prospective treatment
c. In reporting comparative income statements in Year 3:
What net income amounts are included for Year 1? Answer 3
What net income amounts are included for Year 2?

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