Resource: ABC Financial and Supplemental Data Excel® spreadsheets.

Calculate the deferred tax asset or liability of an error for the scenario provided.

Calculate inventory calculation average cost, first-in-first-out (FIFO), and last-in-first-out (LIFO). Record the calculated average cost in the financial statement.

For the individual assignment, you should complete 2013's balance sheet and income statement by using the data provided on the spreadsheet for abc financial data. To complete these, you need to work out some of the data, such as inventory, CGS, deferred tax liability, retained earnings. You should also complete the supporting calculation for CGS, the entry to update CGS, and the entries to adjust for the prior period error related to depreciation and for the inventory method change.

The journal entries to correct the depreciation error and the inventory change should both go through RE. The tax impact should be considered for both adjustments. The inventory method change information tells us, e.g., that the pretax increase in income from the change in method is 1285, which means the total amount of increase in inventory should be 1285 (the higher the ending inventory, the lower the CGS, thus the higher the pretax income), while the adjustment to RE should be 1285 minus the tax impact (40%). The amount of the tax impact should go to deferred tax liability.

Please use these numbers for the following accounts. The data provided on the "information sheet" do not seem to support these numbers, but these are on the solutions:

Cash 1929

Property, plant, equipment 39064

Accumulated depreciation 15716

Depreciation and amortization expense 1627

Retained earnings should be used as a plug figure at the end for the balance sheet.

Calculate the straight-line depreciation.

Create an income statement using the results calculated above.

Create a balance sheet using the results calculated above. Insert your Learning Team's footnotes into the balance sheet and income statement. Identify in the footnotes the depreciation methods being used for the fixed assets. Also identify the footnotes the methodology used to determine deferred taxes.