Business, 25.11.2021 06:10 celinarubio77
Vance Company reported the following summarized annual data at the end of 2020:
Sales revenue $1,000,000
Cost of goods sold 600,000
Gross margin 400,000
Operating expenses 250,000
Income before income taxes $150,000
Based on an ending FIFO inventory of $250,000. The income tax rate is 40%. The controller of the company is considering a switch from FIFO to LIFO. He has determined that on a LIFO basis, the ending inventory would have been $180,000.
a. Re-state the summary information on a lifo basis.
b. What effect, if any, would the proposed change have on Vance’s income tax expense, net income, and cash flows?
c. If you were the owner of business, what would you be to this proposed change?
Answers: 2
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Vance Company reported the following summarized annual data at the end of 2020:
Sales revenue $1,0...
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