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Unformatted text preview: items listed in the problem will require an adjustment to the $790,000 income figure given in the problem and which items will be recorded after Income from Continuing Operations before Taxes (IFCOBT). Before IFCOBT After IFCOBT 1. Uninsured Flood Loss YES 2. Depreciation Error Note that error is recorded in Retained Earnings for years Before 2010. YES 3. Loss on Securities YES 4. Insurance Proceeds YES 5. Discontinued Operation YES 6. Change in method of valuing Inventory from average cost to FIFO. No adjustment needed Since FIFO was used to compute 2010 income. There will be an Adjustment to Beginning Retained Earnings for the effect on prior Years income....
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- Spring '11