Harrison Company, Inc. began operations on January 1, 2010, and applied the LIFO method for inventory valuation. On June 10, 2011, Harrison adopted the FIFO method of accounting for inventory. Additional information is as follows: The LIFO method was applied during the first quarter of 2011 and the FIFO method was applied during the second quarter of 2011 in computing income, above. Harrison's effective income tax rate is 40 percent. Harrison has 500,000 shares of common stock outstanding at all times.
Compute the after-tax effect of Harrison's change in inventory method.

Question

Harrison Company, Inc. began operations on January 1, 2010, and applied the LIFO method for inventory valuation. On June 10, 2011, Harrison adopted the FIFO method of accounting for inventory. Additional information is as follows:  The LIFO method was applied during the first quarter of 2011 and the FIFO method was applied during the second quarter of 2011 in computing income, above. Harrison's effective income tax rate is 40 percent. Harrison has 500,000 shares of common stock outstanding at all times.
Compute the after-tax effect of Harrison's change in inventory method.

Quizplus · Accepted Answer

The Answer of Harrison Company, Inc. began operations on January 1, 2010, and applied the LIFO method for inventory valuation. On June 10, 2011, Harrison adopted the FIFO method of accounting for inventory. Additional information is as follows:  The LIFO method was applied during the first quarter of 2011 and the FIFO method was applied during the second quarter of 2011 in computing income, above. Harrison's effective income tax rate is 40 percent. Harrison has 500,000 shares of common stock outstanding at all times.
Compute the after-tax effect of Harrison's change in inventory method.