What is the appropriate treatment in an interim financial report for a LIFO liquidation?
A) The LIFO liquidation is always ignored for interim reporting.
B) The LIFO liquidation should always be reflected in gross profit on an interim income statement.
C) The LIFO liquidation should always result in replacement cost valuation of ending inventory on the interim balance sheet and the interim income statement.
D) The LIFO liquidation should always result in replacement cost valuation of ending inventory on the interim income statement but not the interim balance sheet.
E) The LIFO liquidation should only be reflected in gross profit on an interim income statement if it is determined that it will not be replaced by year-end.

Question

Quizplus · Accepted Answer

If a LIFO liquidation is expected to be temporary and inventory will be replaced by year-end, it is not reflected in interim financial reports. If it is not expected to be replaced, it should be reflected in the interim income statement.

What Is the Appropriate Treatment in an Interim Financial Report