In 2012 2011 and 2010 net income included gains of 328

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Reference no: EM13578531

Excerpted from ExxonMobil%u2019s 2012 annual report is the following information about its inventories, most of which are carried at LIFO.

In 2012, 2011 and 2010, net income included gains of $328 million, $292 million and $317 million, respectively, attributable to the combined effects of LIFO inventory accumulations and drawdowns. The aggregate replacement cost of inventories was estimated to exceed their LIFO carrying values by $21.3 billion and $25.6 billion at December 31, 2012, and 2011, respectively.

Ending inventories of crude oil and products for 12/31/12 and 12/31/11 were $10,836 and 11,665, in millions respectively.

In 2012, ExxonMobil reported cost of goods sold of $303,670 (in millions) and income before income taxes of $78,726 (in millions) with income tax expense of $31,045 (in millions).

A) What is meant by %u201Cdrawdowns%u201D?

B) Determine what ending inventory would have been if FIFO had been used for 12/31/12 and 12/31/11, respectively.

C) Determine CGS and income before income taxes if Exxon Mobil had used FIFO.

D) Roughly recompute its tax bill if it had used FIFO.

E) Comment on your analysis.

Reference no: EM13578531

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