Reference no: EM133179305
Question - In 2016 and 2017, ExxonMobil's inventory on its balance sheet was $15,080 million and $16,992 million, respectively. In 2016 and 2017, ExxonMobil's LIFO Reserve was $8,100 million and $10,800 million, respectively.
A. Was Exxon Mobil's inventory on its balance sheet understated or overstated in 2016 and 2017? Why and by what amount?
B. Using a 40% tax rate, how much income tax did ExxonMobil save in 2017 by being on LIFO?
C. Using a 40% tax rate, at the end of 2017, cumulatively, how much in income taxes did ExxonMobil save by being on LIFO?
D. In 2018, Exxon's LIFO Reserve decreased to $8,200 million from $10,800 million in 2017. Assuming a 40% tax rate, what was the impact on Exxon's income statement, balance sheet and cash flow statement in 2018? You can use T-accounts if you like. Briefly explain your answer.
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