Brockton Ltd. began applying IFRS in 20X8. One of the necessary adjustments was to adjust past inventory records to remove warehousing expenses from the balances of the ending inventories for 20X5, 20X6, and 20X7, and restate earnings. The pre- adjustment inventory balances and the warehousing costs contained therein were as follows: Balance, 31 December $800, 000 Warehousing Costs $30, 000 18, 000 25, 000 Year 20X7 20X6 20X5 680, 000 720, 000 Required: 1. Show the impact this change will have on the company's earnings. Assume an income tax rate of 30%. Earnings Increase (Decrease) 20X5 20X6 20X7 Warehousing costs: Reported in opening inventory Reported in ending inventory Net change in pre-tax eanings Income tax Adjustment to net earnings
Brockton Ltd. began applying IFRS in 20X8. One of the necessary adjustments was to adjust past inventory records to remove warehousing expenses from the balances of the ending inventories for 20X5, 20X6, and 20X7, and restate earnings. The pre- adjustment inventory balances and the warehousing costs contained therein were as follows: Balance, 31 December $800, 000 Warehousing Costs $30, 000 18, 000 25, 000 Year 20X7 20X6 20X5 680, 000 720, 000 Required: 1. Show the impact this change will have on the company's earnings. Assume an income tax rate of 30%. Earnings Increase (Decrease) 20X5 20X6 20X7 Warehousing costs: Reported in opening inventory Reported in ending inventory Net change in pre-tax eanings Income tax Adjustment to net earnings
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter8: Inventories: Special Valuation Issues
Section: Chapter Questions
Problem 13RE: Refer to the information provided in RE8-4. If Paul Corporations inventory at January 1, 2019, had a...
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