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How perera should reflect the change in accounting principle

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Reference no: EM131800067

Problem

Perera Company has used the average cost method for inventory valuation since it began operations in 2012, but elected to change to the FIFO method in 2015. Year-end inventory valuations under each method are shown below:

Year

Average Cost

FIFO

2012

$42,000

$49,000

2013

53,000

64,000

2014

58,000

68,000

2015

65,000

72,000

Your boss asks you how Perera should reflect this change in accounting principle in its financial statements for the year ended December 31, 2015 (ignore income taxes). Be complete.

Reference no: EM131800067

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