Account For Changes In Accounting Principle Practice Test

A U.S. GAAP for-profit retailer changed its inventory costing method from FIFO to weighted-average as of January 1, 20X5, and applied the change retrospectively under FASB ASC 250. The company presents comparative 20X5 and 20X4 income statements. For 20X4, cost of goods sold under FIFO was $4,000,000; under weighted-average it would have been $4,070,000. The tax rate is 30%. What is the impact of retrospective application on 20X4 income from continuing operations and 20X4 ending retained earnings presented in the 20X5 comparative financial statements?

A U.S. GAAP for-profit entity changes its accounting principle for long-term contracts from the completed-contract method to the percentage-of-completion method and applies the change retrospectively under FASB ASC 250. Management is preparing the note disclosure describing the change. Which disclosure is most appropriate regarding the reason for the change?