Orlando Company Has Used the Average Cost Method for Inventory

question 66

Essay

Orlando Company has used the average cost method for inventory valuation since it began business in 2014, but has elected to change to the FIFO method starting in 2017. Year-end inventory valuations under each method are shown below: $\begin{array}{rrr}&\text { Average }\\\text { Year }&\text { Cost }&\text { FIFO }\\2014 & \$ 42,000& \$ 47,000 \\2015 & 53,000& 61,000\\2016 & 59,00 0& 68,00 0 \\2017 & 62,000& 72,000\end{array}$ Required:
How would Orlando reflect the change in accounting principle in its financial statements (ignore income taxes)?

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Definitions:

Reproductive Success

The transfer of genetic material to subsequent generations, enabling those offspring to further transmit the same genetic information.

Avoid Accidents

Strategies or practices aimed at preventing unintended and harmful incidents or events.

Gene Recruitment

The evolutionary process by which a gene acquires a new function, distinct from its original function.

Promiscuous Proteins

Proteins that can perform multiple biochemical functions or interact with many different molecules within a cell due to their flexible structure.