A change in inventory reporting from LIFO to FIFO is:
A)An extraordinary item.
B)A discontinued item.
C)Not allowed once lower of cost or market is applied.
D)Allowed,if it improves the usefulness of information in the financial statements.
E)Not reported,as it is considered a change in accounting estimate.

Question

Quizplus · Accepted Answer

A change in inventory reporting from LIFO to FIFO is allowed, if it improves the usefulness of information in the financial statements. Such a change is considered a change in accounting principle and must be applied retrospectively, meaning the financial statements for previous years must be restated to reflect the new accounting method. This change is not an extraordinary item or discontinued item, and it is not prohibited by the lower of cost or market rule. However, it is not considered a change in accounting estimate, as it involves a change in the underlying accounting principle.

A Change in Inventory Reporting from LIFO to FIFO Is