Reference no: EM132564055

Question - Ouyang Inc. Financial Information (in millions)

Financial Information 2013 2012

Inventories 483 329

LIFO reserve 172 148

Total assets 1,928 1,783

Retained earnings (RE) 372 298

Sales 6,372 5,729

Cost of goods sold (COGS) 3,829 3,518

Net income (NI) 74 62

Also assume that the effective income tax rate for Ouyang Inc. is 30%.

Question 1 - If Ouyang Inc. had used FIFO instead of LIFO, the amount of inventory for 2013 would have been closest to:

872 million

819 million

762 million

722 million

655 million

Question 2 - If Ouyang Inc. had used FIFO instead of LIFO, the amount of cost of goods sold (COGS) for 2013 would have been closest to:

3,805 million

3,618 million

3,092 million

2,983 million

2,738 million

Question 3 - If Ouyang Inc. had used FIFO instead of LIFO, net income for 2013 would have been higher by an amount closest to:

28.9 million

26.3 million

24.7 million

16.8 million

13.4 million

Question 4 - If Ouyang Inc. had used FIFO instead of LIFO, the retained earnings for 2013 would have been higher by an amount closest to:

183 million

120.4 million

113.8 million

98.3 million

87.7 million

Question 5 - Ouyang Inc purchased some inventory in 2011 for $500. In 2012, the market value or net realizable value was $200 and Ouyang Inc wrote down the inventory value to $200. In 2013, it was determined that the market value or net realizable value was $1,000. Ouyang Inc's inventory balance will most likely be (under IFRS and U.S. GAAP separately):

IFRS: $200; U.S. GAAP: $200;

IFRS: $200; U.S. GAAP: $500;

IFRS: $1,000; U.S. GAAP: $500;

IFRS: $500; U.S. GAAP: $500;

IFRS: $500; U.S. GAAP: $200;