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)?

---

Definitions:

Perception

Perception is the process through which people receive, organise and interpret information from the environment.

Ethnic Stereotyping

The oversimplified and generalized beliefs about a particular ethnic group, often leading to prejudice and discrimination.

Gender Stereotyping

The act of attributing particular traits, qualities, or roles to people purely on the basis of their gender.