GG Inc. uses LIFO. GG disclosed that if FIFO had been used, inventory at the end of 2013 would have been $15 million higher than the difference between LIFO and FIFO at the end of 2012. Assuming GG has a 40% income tax rate:
A)Its reported cost of goods sold for 2013 would have been $9 million higher if it had used FIFO rather than LIFO for its financial statements.
B)Its reported cost of goods sold for 2013 would have been $15 million higher if it had used FIFO rather than LIFO for its financial statements.
C)Its reported net income for 2013 would have been $9 million higher if it had used FIFO rather than LIFO for its financial statements.
D)Its reported net income for 2013 would have been $15 million higher if it had used FIFO rather than LIFO for its financial statements.

Question

Quizplus · Accepted Answer

The Answer of GG Inc. uses LIFO. GG disclosed that if FIFO had been used, inventory at the end of 2013 would have been $15 million higher than the difference between LIFO and FIFO at the end of 2012. Assuming GG has a 40% income tax rate:
A)Its reported cost of goods sold for 2013 would have been $9 million higher if it had used FIFO rather than LIFO for its financial statements.
B)Its reported cost of goods sold for 2013 would have been $15 million higher if it had used FIFO rather than LIFO for its financial statements.
C)Its reported net income for 2013 would have been $9 million higher if it had used FIFO rather than LIFO for its financial statements.
D)Its reported net income for 2013 would have been $15 million higher if it had used FIFO rather than LIFO for its financial statements.

GG Inc Uses LIFO