Reference no: EM132754185

1. LIFO liquidation (i.e., when a LIFO firm liquidates its old inventory) usually results in lower cost of goods sold and higher income. true or false

2. Land is always classified as Property, Plant, and Equipment on a company's balance sheet regardless of its purpose. true or false

3. Which inventory costing method most closely approximates current (i.e., most recent) cost for Ending Inventory and Cost of Goods Sold respectively (in the same order): LIFO TO FIFO or FIFO to LIFO

4. Red Carpet Company sells product 2005WSC for $30 per unit. The cost of one unit of 2005WSC is $27, and the replacement cost is $26. The estimated cost to dispose of a unit is $6, and the normal profit is 40% of sales price. At what amount per unit should product 2005WSC be reported, applying lower-of-cost-or-net-realizable-value (LCNRV)?

5. The Pink Shop shows the following data related to an item of inventory:

Inventory, January 1 200 units @ $5.00
Purchase, January 9 600 units @ $5.40
Purchase, January 19 140 units @ $6.00
Inventory, January 31 180 units
Calculate ending inventory under FIFO and LIFO respectively under the periodic system and enter here (please enter whole numbers without dollar sign, thousand separator, or decimal points):

6. DV LIFO: Conway Company uses FIFO in its internal inventory accounts. At year end, it converts the FIFO results to DV LIFO. The company adopted LIFO on December 31, 2011 with a base inventory of $107,000. The following table summarizes data available through December 31, 2014.

                                            Inventory at year end cost        Cost Index

2012 ending inventory              $116,600                        1.06
2013 ending inventory             $128,800                         1.12
2014 ending inventory                  $129,950                    1.15

Problem a. What amount would Conway report as the value of inventory under DV LIFO on its 2012 balance sheet?

Problem b. What is the effect of the conversion to DV LIFO on 2012 COGS? Indicate below if COGS increases, decreases, or does not change as a result of the conversion from FIFO to DV LIFO and then indicate the dollar amount (if any).

Problem c. What amount would Conway report as the value of inventory under DV LIFO on its 2013 balance sheet?

Problem d. What amount would Conway report as the value of inventory under DV LIFO on its 2014 balance sheet?