1. Assume that Barber Co. uses the LIFO inventory costing method for both tax an
ID: 2582112 • Letter: 1
Question
1. Assume that Barber Co. uses the LIFO inventory costing method for both tax and financial reporting purposes whe balance sheet reports inventories at $297 million. Then, in its footnotes, the company reports that inventories would have been $327 million had the company used the FIFO method The difference between these two numbers ($30 million) is referred to as: A) LIFO reserve B) LIFO conformity rule C) LIFO holding gain D) Inventory temporary difference 2. Aiello, Inc. the nhad the following inventory in fiscal 2016. The company uses the FIFO method of accounting for Beginning Inventory, January 1, 2016: 130 units$15.00 Purchase 200 units@ $18.00 Purchase 50 units@ $13.50 Purchase 110 units $15.75 Ending Inventory, December 31, 2016: 120 units AbeSrmso n The ost of goods sold for facal 2016 is: B) $6,045.00 C) $6,157.50 D) $5,305.75 3. In times of falling prices, choosing LIFO over FiFO as an Inventory cost method would statements as follows: oost method would affect the financial A) Cost of goods sold will be higher and ending inventory will be lower B) Cost of goods sold will be lower and ending inventory will be lower C) Cost of goods sold will be higher and ending inventory will be higher D) Cost of goods sold will be lower and ending inventory will be higher 4. The January 28, 2017 (fiscal year 2016) financial statements of Caleres, Inc. reported the following information (in thousands). 2016 Cost of sales Inventories, net LIFO reserve $1,517,397 $1,529,527 546,745 4,094 585,764 4,345 If Caleres had used the FIFO method of inventory costing, 2016 inventory would have been: A) $506,852 million B) $590,109 million C) $504,752 million D) $581,419 million 5. Which of the following would not require the company to record an accrual on the balance sheet? a) The company owes $43,000 in wages to its employees for the previous two weeks. b) Interest will be paid when a note c) Management believes a lawsuit against the company is meritless because they have never had a sngle payable matures in the following accounting period. complaint about dangerous side effects of their drug in two years. d) The company knows that they will be fined for pollution as a result of their manufacturing process and can estimate the amount of the obligation.Explanation / Answer
Companies using LIFO are required to state the amount at which inventory would have been reported had it used FIFO.The Difference between FIFO Inventory and LIFO Inventory is termed as LIFO Reserve.
Answer A
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