Taxes in the current year

Assignment Help Financial Accounting

Reference no: EM13958079

Suppose you are the controller of a company that sells inventory. Also, suppose the economy currently enters a period of high inflation. Although profits are higher this year than last year, you realize that the cost to replace inventory is also higher. You are aware that many companies are changing to the Last-In First-Out (LIFO) inventory method to save on taxes in the current year; however, you are concerned that when prices eventually decline, the LIFO method will result in higher taxes. Because declining prices are usually equated with economic recession, it is likely that the higher taxes will be paid when revenues are declining. What factors should you consider before making a change to LIFO? Based on the above considerations, what would you recommend?

Reference no: EM13958079

Questions Cloud

Produce greater long-term overall economic consequences : What role, if any, should the principle of loyalty play in business decisions? Assume that the foreign trade will produce greater long-term overall economic consequences. Is it fair for some individuals to lose their jobs so that other individuals wi..

Differences between data warehouses and data marts : Discusses the differences between data warehouses and data marts. Also, discuss how organizations can use data warehouses and data marts to acquire data. You must use the CSU Online Library to locate at least two sources for your paper.

Draw a pareto chart to model the sources of defects : The Co-Pilot Pen Company has taken samples of its defects to find sources of the defects. Draw a Pareto chart to model the sources of defects.

Create a use case diagram for osceolas operations : Osceola Auto Parts is an independent auto parts dealer that sells auto parts, runs tests on customers’ cars, and delivers parts and tools to mechanic shops around town. Identify possible actors and use cases involved in Osceola’s business functions. ..

Taxes in the current year : You are aware that many companies are changing to the Last-In First-Out (LIFO) inventory method to save on taxes in the current year; however, you are concerned that when prices eventually decline, the LIFO method will result in higher taxes

Specific elements that are more or less difficult to manage : Discuss with the class how a systems analyst can manage each of the six cost elements of maintenance described in the chapter. Include some examples of how you think these elements can be managed. Do you think there are specific elements that are mor..

Behavior in the rational emotive behavior model : Discuss the interrelationship between VABEs and behavior in the Rational Emotive Behavior (REB) model. Provide an example from work, social relationships or the Bible. How can VABES be used to coach employees for improved performance?

What is the lower and upper specification limit : The length of a bar is expected to be cut to a length of 2.25±.03 inches. A quality manager measures the cut bars and finds the sample mean of the length of the bar to be 2.259 inches, with a standard deviation of .007 inches. What is the lower and u..

How can diversity give a company a competitive edge : How can diversity give a company a competitive edge? Can diversity really make a difference in the bottom line for a company? How? Provide examples.

User Account

All Pages