Exercise 22-3 Taveras Co. decides at the beginning of 2014 to adopt the FIFO method of inventory valuation. Taveras had used the LIFO method for financial reporting since its inception on January 1, 2012, and had maintained records adequate to apply the FIFO method retrospectively. Taveras concluded that FIFO is the preferable inventory method because it reflects the current cost of inventory on the balance sheet. The table presents the effects of the change in accounting principle on inventory and cost of goods sold. Inventory Determined by Cost of Goods Sold Determined by Date LIFO Method FIFO Method LIFO Method FIFO Method January 1, 2012 $ 0 $ 0 $ 0 $ 0 December 31, 2012 102 84 783 801 December 31, 2013 202 242 1,004 946 December 31, 2014 330 404 1,136 1,102 Retained earnings reported under LIFO are as follows. Retained Earnings Balance December 31, 2012 $2,609 December 31, 2013 4,997 December 31, 2014 7,253 Other information: 1. For each year presented, sales are $4,394 and operating expenses are $1,002. 2. Taveras provides two years of financial statements. Earnings per share information is not required. Prepare income statements under LIFO for 2012, 2013, and 2014. TAVERAS CO. Income Statement For the Year Ended December 31 LIFO 2012 2013 2014 $ $ $ $ $ $ $ :  $ :  $ .

1. Exercise 22-3
Taveras Co. decides at the beginning of 2014 to adopt the FIFO
method of inventory valuation. Taveras had used the LIFO
method for financial reporting since its inception on January 1,
2012, and had maintained records adequate to apply the FIFO
method retrospectively. Taveras concluded that FIFO is the
preferable inventory method because it reflects the current cost
of inventory on the balance sheet. The table presents the effects
of the change in accounting principle on inventory and cost of
goods sold.
Inventory Determined by
Cost of Goods Sold Determined by
Date
LIFO Method
FIFO Method
LIFO Method
FIFO Method
January 1, 2012
$ 0
$ 0
$ 0
$ 0
December 31, 2012

2. 102
84
783
801
December 31, 2013
202
242
1,004
946
December 31, 2014
330
404
1,136
1,102
Retained earnings reported under LIFO are as follows.
Retained Earnings Balance
December 31, 2012
$2,609
December 31, 2013
4,997

3. December 31, 2014
7,253
Other information:
1.
For each year presented, sales are $4,394 and operating
expenses are $1,002.
2.
Taveras provides two years of financial statements. Earnings
per share information is not required.
Prepare income statements under LIFO for 2012, 2013, and
2014.
TAVERAS CO.
Income Statement
For the Year Ended December 31
LIFO
2012
2013
2014
$
$

4. $
$
$
$
$
:
$
:
$