Question - Change in accounting principle.
In 2011, Fischer Corporation changed its method of inventory pricing from LIFO to FIFO. Net income computed on a LIFO as compared to a FIFO basis for the four years involved is: (Ignore income taxes.)
LIFO FIFO
2008 $78,200 $83,700
2009 84,500 88,100
2010 87,000 91,400
2011 92,500 94,700
Instructions
(a) Indicate the net income that would be shown on comparative financial statements issued at 12/31/11 for each of the four years, assuming that the company changed to the FIFO method in 2011.
(b) Assume that the company had switched from the average cost method to the FIFO method with net income on an average cost basis for the four years as follows: 2008, $80,400; 2009, $86,120; 2010, $90,300; and 2011, $93,600. Indicate the net income that would be shown on comparative financial statements issued at 12/31/11 for each of the four years under these conditions.
(c) Assuming that the company switched from the FIFO to the LIFO method, what would be the net income reported on comparative financial statements issued at 12/31/11 for 2008, 2009, and 2010?