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Pace Instrument Corp a small company that follows ASPE began operations on January 1, 2014, and uses a periodic inventory system The following net income amounts were calculated for Pace under

Pace Instrument Corp., a small company that follows ASPE, began operations on January 1, 2014, and uses a periodic inventory system. The following net income amounts were calculated for Pace under three different inventory cost formulas: Instructions Answer the following, ignoring income tax considerations. (a) Assume that in 2017, Pace changed from the weighted average cost formula to the FIFO cost formula and it was agreed that the FIFO method provided more relevant financial statement information. Prepare the necessary journal entry for the change that took place during 2017, and provide all the information that is needed for reporting on a comparative basis. (b) Assume that in 2017, Pace, which had been using the LIFO method since incorporation in 2014, changed to the FIFO cost formula in order to comply with CPA Canada Handbook, Part II, Section 3031, because LIFO is not a permitted inventory cost flow assumption under GAAP. The company applies the new policy retrospectively. Prepare the necessary journal entry for the change, and provide all the information that is needed for reporting on a comparative basis.

Apr 21 2020 View more View Less

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