Turnbow Company, a telecommunications equipment company, has used the LIFO method adjusted for lower...

Question

Turnbow Company, a telecommunications equipment company, has used the LIFO method adjusted for lower of cost or market for a number of years. Due to falling prices of its equipment, it has had to adjust (reduce) the cost of inventory to market each year for two years. The company is considering changing its method to FIFO adjusted for lower of cost or market in the future. Explain how the accounting conventions of consistency, full disclosure, and conservatism apply to this decision. If the change were made, why would management expect fewer adjustments to market in the future?

Robert · Accepted Answer

Turn bow Company, a telecommunications equipment company, has used the 
LIFO method adjusted for lower of cost or market for a number of years. Due to 
falling prices of its equipment, it has had to adjust (reduce) the cost of inventory 
to market each year for two years. The company is considering changing its 
method to FIFO adjusted for lower of cost or market in the future. Explain how the 
accounting conventions of consistency,

Turnbow Company, a telecommunications equipment company, has used the LIFO method adjusted for lower of cost or market for a number of years. Due to falling prices of its equipment, it has had to...

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