What are the tax effects of each method

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Question - Dell Computer uses FIFO for inventory costing. Its costs are relatively steady from year-to-year. General Electric (GE), on the other hand, uses LIFO for its U.S. big machinery inventory and FIFO for international segments.  Choose one of the questions to discuss:

1. As the accountant for Dell Computers, why would you choose FIFO inventory costing?

2. As the accountant for General Electric (GE), US division, why would you choose LIFO inventory costing?

3. What are the effects on the income statement and balance sheet of each of the inventory cost flow assumptions?

4. What are the tax effects of each method?

5. Why does General Electric use LIFO for its domestic financial statements and FIFO for reporting its international statements under IFRS?

Reference no: EM133150229

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