Answered step by step
Verified Expert Solution
Question
1 Approved Answer
In July of 2025, Lilac Corporation discovered that it had for the past 10 years capitalized as production costs certain expenses that are properly classified
In July of 2025, Lilac Corporation discovered that it had for the past 10 years capitalized as production costs certain expenses that are properly classified as deductible administrative expenses. The total amount of the expenses as of December 31, 2024 was $300,000 ($60,000 of the item was included in the beginning inventory on January 1, 2024 and $240,000 was previously deducted as cost of goods sold). An automatic accounting method change is available. Group of answer choices The company should change its accounting method for 2024, report a Section 481(a) adjustment of -60,000, and reduce 2024 taxable income by 15,000. The company should change its accounting method for 2024, report a Section 481(a) adjustment of -60,000, and reduce 2024 taxable income by 60,000. The company should amend its 2023 tax return and reduce its income by $300,000. The company should amend its 2023 tax return and reduce its income by $60,000. The company should change its accounting method for 2024, report a Section 481(a) adjustment of +60,000 and increase 2024 taxable income by 15,000
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started