Question

Analyzing of Inventory and Footnote Disclosure The inventory footnote from Deere & Company's 2013 10-K follows (5 millions). 15. INVENTORIES Most inventories owned by Deere & Company and its US equipment subsidiaries are valued at cost, on the last in, first-out" (LIFO) basis. Remaining inventories are generally valued at the lower of cost, on the first in, first-out" (FIFO) basis, or market. The value of gross inventories on the LIFO basis represented 63 percent and 61 percent of worldwide gross inventories at FIFO value on October 31, 2013 and 2012, respectively. If all inventories had been valued on a FIFO basis, estimated inventories by major classification at October 31 in millions of dollars would have been as follows: 2013 2012 Raw materials and supplies $1.954 $1,874 Work in process 753 652 Finished goods and parts 3,757 4065 Total FIFO value 6,464 6,591 Less adjustment to LIFO value (1,529) (1,421) Inventories 14,935 55,170 We note that not all of Deere's inventories are reported using the same inventory costing method (companies can use different inventory costing methods for different Inventory pools).

Answer 1

Answer-a-Deere's inventories are reported on its 2013 Balance Sheet =$4,935

b-Inventories would have been reported on Deere's 2013 Balance Sheet had it used FIFO Inventory Costing= $6,464

c- Pretax income till the end of fiscal 2013 has been decreased by $(1,529) million since Deere adopted LIFO inventory costing ($6,424 million - $4,935 million).

d-Deere's cumulative income taxes were lowered by $535.15 million ($1,529*35%) as compared to the taxes that would have been paid under the FIFO system.

e-Deere's pretax income for 2013 Increased by $108 ($1,529-1,421)

Deere's tax expense for 2013 Increased by $37.8 ($108*35%)