Facts
(a) All Change Co. Inc. changed its accounting policy in 200Y with respect to the valuation of inventories.
Up to 200X, inventories were valued using a weighted average cost (WAC) method. In 200Y the method was changed to first in, first out (FIFO), as it was considered to more accurately reflect the usage and flow of inventories in the economic cycle. The impact on inventory valuation was determined to be
|
At December 31, 200W: |
an increase of $10,000 |
|
At December 31, 200X: |
an increase of $15,000 |
|
At December 31, 200Y: |
an increase of $20,000 |
(b) The income statements prior to adjustment are
|
200Y |
200X |
|
|
Revenue |
$250,000 |
$200,000 |
|
Cost of sales |
100,000 |
80,000 |
|
Gross profit |
150,000 |
120,000 |
|
Administration costs |
60,000 |
50,000 |
|
Selling and distribution costs |
25,000 |
15,000 |
|
Net profit |
$65,000 |
$55,000 |
Required
Present the change in accounting policy in the Income Statement and the Statement of Changes in Equity in accordance with requirements of IAS 8.