Change of inventory valuation method

CPA Exam Forum The Forum FAR Review Change of inventory valuation method

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  • #174765

    Questions states:

    Change of inventory valuation from FIFO to weighted average is recorded as an adjustment to beginning retained earnings.

    A different question says change of accounting principle inseparable from a change of accounting estimate is reported, net of tax, as a component of income from continuing operations.

    What is the difference?

    #382024

    musicamor
    Member

    I need more information because a change in estimate only requires a prospective change, not a retrospective change and it’s gross of tax; a change in principle, i.e., going from an unacceptable method of accounting for inventory to an acceptable method for accounting for inventory will result in retrospective application, to the earliest years being presented. R/E is restated and the effects are presented net of tax.

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