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During 2014 (its first year of operations) and 2015, Batali Foods used the FIFO inventory costing method for both financial reporting and tax purposes. At
During 2014 (its first year of operations) and 2015, Batali Foods used the FIFO inventory costing method for both financial reporting and tax purposes. At the beginning of 2016, Batali decided to change to the average method for both financial reporting and tax purposes. |
Income components before income tax for 2016, 2015, and 2014 were as follows ($ in millions): |
2016 | 2015 | 2014 | |||||||
Revenues | $ | 590 | $ | 560 | $ | 550 | |||
Cost of goods sold (FIFO) | (63 | ) | (57 | ) | (55 | ) | |||
Cost of goods sold (average) | (96 | ) | (90 | ) | (86 | ) | |||
Operating expenses | (322 | ) | (318 | ) | (310 | ) | |||
Dividends of $36 million were paid each year. Batalis fiscal year ends December 31. |
Determine the balance in RE at january 2015 as batali reported using FIFO method and adjustment of balance in RE as on january 2015 using average method instead of FIFO method. (Enter your answer in millions (i.e., 10,000,000 should be entered as 10).)
S in millions) 55 Retained earnings balance previously reported using FIFO, Jan. 1, 2015 Adjustment to balance for change in inventory methods Retained earnings balance using average method, Jan 1, 2015 (31) 86 $
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