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Hello. Can you please help me with this. Can you also put the journal entries into a chart or excel so that I can see
Hello. Can you please help me with this. Can you also put the journal entries into a chart or excel so that I can see how it should be formatted. Thanks so much.C Analyzing Effects of Change from LIFO to FIFO Inventory Costing Virco Manufacturing Corp. provided the following note in its annual report for the year ended January : On January the Company elected to change its costing method for the material component of raw materials, work in process, and finished goods irventory to the lower of cost or market using the firstin firstout FIFO method, from the lower of cost or market using the lastin first out FO method. The labor and overhead components of inventory have historically been valued on a FIFO basis. The Company believes that the FIFO method for the material component of inventory is preferable as it conforms the inventory costing methods for all components of irventory into a single costing method and betler reflects current acquisition costs of those inventories on our consolidated balance sheets. Additionally, presenta tion of inventory at FIFO aligns the financial reporting with the Company's borrowing base under its line of credit see Note for further discussion of the line of credit Further, this change will promote greater comparability with companies that have adopted International Financial Reporting Standards, which does not recognize UFO as an acceptable accounting method. In accordance with FASB ASC Topic AC counting Changes and Error Corrections," al prior periods presented have been adjusted to apply the new accounting method retrospectively. In addition, as an indirect effect of the change in our inventory costing method from LIFO to FIFO, the Company recorded additional inventory lower of cost or market expenses and changes in deferred tax assets and income tax expense. The retroactive effect of the change in our inventory costing method...increased the February opening retained earnings balance by $ milion, and increased our inventory and retained earnings balances by $ million and $ million as of January by $ million and $ milion as of January and by $ million and $ milion as of January respectively. REQUIRED a What do the stated changes in inventory in each year represent eg the $ million in Equity? What is the difference between the two? b What were Virco's stated reasons for the change to FIFO? c In the Annual Report for the year ended January Virco states the following: "Inventories are stated at the lower of cost or market. Cost is determined using the lastin firstout LIFO method of valuation for the material content of inventories and the firstin firstout FIFO method for labor and overhead. The Company uses LIFO as it results in a better matching of costs and revenues." What are some possible motivations behind why Virco changed to the FIFO method of accounting beyond those listed by management?
Hello. Can you please help me with this. Can you also put the journal entries into a chart or excel so that I can see how it should be formatted. Thanks so much.C Analyzing Effects of Change from LIFO to FIFO Inventory Costing
Virco Manufacturing Corp. provided the following note in its annual report for the year ended
January :
On January the Company elected to change its costing method for the material component of
raw materials, work in process, and finished goods irventory to the lower of cost or market using the firstin
firstout FIFO method, from the lower of cost or market using the lastin first out FO method. The
labor and overhead components of inventory have historically been valued on a FIFO basis. The Company
believes that the FIFO method for the material component of inventory is preferable as it conforms the
inventory costing methods for all components of irventory into a single costing method and betler reflects
current acquisition costs of those inventories on our consolidated balance sheets. Additionally, presenta
tion of inventory at FIFO aligns the financial reporting with the Company's borrowing base under its line
of credit see Note for further discussion of the line of credit Further, this change will promote greater
comparability with companies that have adopted International Financial Reporting Standards, which does
not recognize UFO as an acceptable accounting method. In accordance with FASB ASC Topic AC
counting Changes and Error Corrections," al prior periods presented have been adjusted to apply the new
accounting method retrospectively. In addition, as an indirect effect of the change in our inventory costing
method from LIFO to FIFO, the Company recorded additional inventory lower of cost or market expenses
and changes in deferred tax assets and income tax expense. The retroactive effect of the change in our
inventory costing method...increased the February opening retained earnings balance by $
milion, and increased our inventory and retained earnings balances by $ million and $ million as of
January by $ million and $ milion as of January and by $ million and $
milion as of January respectively.
REQUIRED
a What do the stated changes in inventory in each year represent eg the $ million in
Equity? What is the difference between the two?
b What were Virco's stated reasons for the change to FIFO?
c In the Annual Report for the year ended January Virco states the following: "Inventories
are stated at the lower of cost or market. Cost is determined using the lastin firstout LIFO
method of valuation for the material content of inventories and the firstin firstout FIFO
method for labor and overhead. The Company uses LIFO as it results in a better matching of
costs and revenues." What are some possible motivations behind why Virco changed to the
FIFO method of accounting beyond those listed by management?
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