What immediate tax consequences

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Question - In 2013, Gail changed from the lower of cost or market FIFO method to the LIFO inventory method. The ending inventory for 2012 was computed as follows:

FIFO Cost

A $26,000

B 52,000

C 30,000

Replacement Cost

A $15,000

B 55,000

C 7,000

Lower of cost or Market

A $15,000

B 52,000

C 7,000

The total of Lower of cost or market is $74,000

Item C was damaged goods, and the replacement cost used was actually the estimated selling price of the goods. Te actual cost to replace item C was $32,000.

A) What is the correct beginning inventory for 2013 under the LIFO method?

B) What immediate tax consequences (if any) will result from the witch to LIFO?

Reference no: EM131929574

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