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How would its pre-tax income be affected

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Question - The following information comes from the 2017 Occidental Petroleum Corporation annual report to shareholders:

NOTE 4 INVENTORIES

Net carrying values of inventories valued under the LIFO method were approximately $172 million and $192 million at December 31, 2017 and 2016, respectively. Inventories consisted of the following: ($ in millions)

2017

2016

Raw materials

$66

$65

Materials and supplies

447

446

Finished goods

776

395

1,289

906

LIFO reserve

(43)

(40)

Total

$1,246

$866

The LIFO reserve indicates that inventories would have been $43 million and $40 million higher at the end of 2017 and 2016, respectively, if Occidental Petroleum had used FIFO to value its entire inventory.

Required - If Occidental Petroleum had used FIFO to value its entire inventory how would its 2017 pre-tax income be affected?

Reference no: EM133157462

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