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hello and welcome to this session this is professor forhat in which we would look at an example that deals with changes in accounting principle this example could be considered a cpa simulation or could be just a regular exercise in your intermediate accounting course regardless you need to know how to deal with changes in accounting principle lets go ahead and get started adam began operation in year 20 x1 and for simplicity the company started using the weighted average to account for its inventory at the beginning of year 20x3 they changed their inventory method to fifo in accordance with the company would come with other companies in the industry and here we have the pre-tax income under both method the weighted average what they used to use and fifo and assume a tax rate of 20 percent so were going to try to answer three questions and when im as im answering those questions i will also explain the changes in accounting principle however just bear in mind this is an example i
