On December 31, 2011 Dean Company Changed Its Method of Accounting

question 64

Multiple Choice

On December 31, 2011 Dean Company changed its method of accounting for inventory from the average cost method to the FIFO method.This change caused the 2011 beginning inventory to increase by $420,000.The cumulative effect of this accounting change to be reported for the year ended 12\31\11, assuming a 40% tax rate, is

• A)$420,000.
• B)$252,000.
• C)$168,000.
• D)$0.

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Definitions:

Direct and Indirect Ownership Interests

Holdings in a company that can be straightforward (direct) or through another entity (indirect).

Sequential Consolidation Method

A method of accounting that involves integrating the financial information of successive levels of subsidiaries within a group, typically starting with the parent company.

'Top Down' Approach

A strategy or method of analysis that starts at the highest level of data or information and works down to more detailed levels, often used in planning, problem-solving, and decision-making.

Sequential Acquisitions

The process of acquiring multiple companies or assets in a specific order, often to strategically grow or expand operations.