What is the effect of Changes on Prior Period financial statements, if a company changes inventory Valuation method from LIFO to FIFO?

it depends on the cost of goods. if the cost is steady, the profit will not be affected. but if the cost is up or down the profit will be affected.

If this change applies to previous year then following changes will take place:

Gross Profit will increase.

Value of Closing Stock will Increase.

Cost of Sales will decrease.

Dear All,

Question is the effect on the "Prior Year Statements"!

From LIFO to FIFO 

one of the changes will be like this

Ending inventory will Increase so COGS will Decrease the result increase in Gross Profit

As its depends upon the nature of the stock...

Mainly it will change the Current Asset in the asset side, with the effect of Profit or loss it wil change accumulated Profit or loss in the liabilities side.