During the third quarter of its (20 mathrm{X} 2) fiscal year, the Square Q Company is considering

Question:

During the third quarter of its $20 \mathrm{X} 2$ fiscal year, the Square Q Company is considering the methods of accounting for accounting changes on its interim statements. Preliminary data are available for the third quarter of $20 \times 2$, ending on September 30, 20X2, prior to any adjustments required for any accounting changes. The company's tax rate is 40 percent of income. Selected interim data, in thousands of dollars, for the company are presented below:

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\section*{Required}
For each of the following independent cases, present the comparative interim financial data for the company for the three quarters of $20 \mathrm{X} 2$, and the comparative data for $20 \mathrm{X} 1$, assuming that in a meeting on the last day of the third quarter of $20 \times 2$, the company decides to make an accounting change, as specified below.

a. The company decides to change to the LIFO method of inventory. If the LIFO method had been used as of January $1,20 \times 2$, beginning inventories would have been $\$ 20,000$ lower than reported. As of September 30, 20X2, the inventories would have been $\$ 32,000$ lower under LIFO. The $\$ 12,000$ difference between January 1, 20X2, and September 30, 20X2, occurred evenly over the first three quarters of $20 \mathrm{X} 2$.

b. The company decides to switch from the straight-line method of depreciation to the accelerated method of depreciation. The accounting department has prepared the following schedule of data, in thousands of dollars, comparing straight-line and accelerated depreciation for each of the interim periods:

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The accounting department determined that there would be no difference in accumulated depreciation prior to January 1, 20X1.

c. The company decides to change its method of accounting for recognizing sales revenue on its long-term contracts. The company had been using the completed contract method, but changed to the percentage-of-completion method. The accounting department prepared an analysis of the sales and gross profit recognition under each of the two methods, in thousands of dollars, as follows:

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