Writing Assignment Use of LIFO
The following information is available for Leno Company:
Sales | $695,000 |
Goods available for sale | $535,000 |
Ending inventory (using FIFO) | $246,000 |
Leno Company currently uses the FIFO cost flow method for financial statement reporting and for tax reporting. It is considering changing to the LIFO cost flow method for tax reporting purposes. If Leno uses LIFO, its ending inventory would be SI 75,000.
a. Why would Leno want to change to LIFO for tax reporting?
b. Discuss any changes that Leno would have to make for GAAP reporting if it does change to LIFO for tax reporting.
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