Ramsgate Company Has Used the FIFO Method for Inventory Valuation

question 23

Essay

Ramsgate Company has used the FIFO method for inventory valuation since it began business in 2014, but has elected to change to the average cost method starting in 2017. Year-end inventory valuations under each method are shown below: Required:
How, and when, would Ramsgate reflect the change in accounting principle in its financial statements (ignore income taxes)?

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Definitions:

High Reliability

The capability of systems, organizations, or products to operate without failure under a wide range of conditions for a specified period.

High Validity

The extent to which a test or research accurately measures or reflects what it is intended to.

Naturalistic Observation

A method of observing behavior, in which clinicians or researchers observe people in their everyday environments.

Cultural Fairness

Involves recognizing and respecting the differences across cultures and ensuring equal opportunities and fairness for people from all cultural backgrounds.