A company wishes to change its inventory valuation method from FIFO to LIFO in the current year. The company believes that in order to determine prior period effects, it would subjective assumptions about the LIFO layers established in prior periods and wishes to avoid retrospective approach in its presentation of financial statements. Which election can this company apply?

Practical application

Impossibility

Impracticability

Undue hardship

A company sold one of its delivery trucks for the salvage value of $5,000. The company had purchased the truck for $20,000 and had fully depreciated it to its salvage value at the time of sale. At the time of the sale, the company recorded the transaction as debit cash $5,000; Credit gain on asset disposal $5,000. Which impact does this error have on the balance sheet?

Cash is overstated by $5,000

Liabilities are overstated by $5,000

Expenses are overstated by $5,000

Assets are overstated by $5,000