Financial Reporting: Inventories Implications for Financial Statements and Ratios

Question 1

Convert FIFO to LIFO

Answer 1

FIFO - LIFO = Inventory(LIFO) + LIFO reserve

Question 2

COGS (FIFO Method)

Answer 2

COGS (FIFO) = COGS(LIFO) - Increase in LIFO reserve

Question 3

NI (FIFO Method)

Answer 3

NI (FIFO) = NI (LIFO) + Increase in LIFO Reserve x (1-Tr)

Question 4

RE (FIFO)

Answer 4

RE (FIFO) = RE(LIFO) + LIFO reserve X (1-Tr)

Question 5

Inventory IFRS vs. GAAP

Answer 5

IFRS: Specific, Weighted Average, FIFO

GAAP: Specific, Weight Ave, FIFO, LIFO

Question 6

LIFO Liquidation (effect on IS)

Answer 6

LIFO Liquid: Beg Inventory > Ending Inventory

Increase in gross profits