nomatlon in its 10-K report: entories at December 31 (S millions) Inven material
ID: 2508798 • Letter: N
Question
nomatlon in its 10-K report: entories at December 31 (S millions) Inven material, work in process, and supplies. 2008 2007 Finished product, se $4,849 6,267 10,095 16,362 $13,042 $14,939 . . 9,426 Total inventories at FIFO. Less LIFO allowance al automotive and other inventories, less allowances.... . The company reports its inventory using the LIFO costing method during 2007 and 2008. At what dollar amount are inventories reported on its 2008 balance sheet? ing had been used? compared to the pretax income that would have been reported using the FIFO costing method? year-end 2008? made that choice? a. At what dollar amount would inventories have been reported in 2008 if FIFO in C. What cumulative effect has the use of LIFO had, as of year-end 2008, on GM's pretax income, d. Assuming a 35% income tax rate, what is the cumulative effect on GM's tax liability as of e. In July 2009, GM changed its inventory accounting to FIFO costs. Why do you suppose GM entories have been reported in 2008 if FIFO inventory cost-Explanation / Answer
a. 13042 b. 14275 c.Pre-tax income increase as the LIFO reserve has decreased in 2008 by 1423-1233= $ 190 d.190*35%= $ 66.5 e. Inventory will be reported at higher & latest costs.
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