Sandstone, Inc

question 83

True/False

Sandstone, Inc., has consistently included some factory overhead as a current expense, rather than as a cost of producing goods. As a result, the beginning inventory for 2018 is understated by $10,000. If Sandstone voluntarily changes accounting methods effective January 1, 2018, the positive adjustment to the inventory is a § 481 adjustment and $2,500 must be added to taxable income for each year 2018, 2019, 2020, and 2021.

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Definitions:

Accretionary Prism

A wedge-shaped mass of sediment and rock scraped off the top of a downgoing tectonic plate and accreted onto the overriding plate at a convergent plate boundary.

Fold and Thrust Belt

A region in the earth's crust where the rocks have been deformed by horizontal compression, leading to the formation of folds and thrust faults.

Anticlines

Upwardly convex folds in rock layers, typically formed through compression within the Earth's crust.

Synclines

Downward-curving folds in sedimentary strata, opposite of anticlines, which can also be indicators of oil and gas deposits.