Harley Davidson manufactures motorcycles and accessories Financial information from the 2012
Harley-Davidson manufactures motorcycles and accessories. Financial information from the 2012 annual report is excerpted as follows:
Balance Sheet Information:
Inventories, net (in thousands):

Inventory obsolescence reserves deducted from FIFO cost were $22.9 million and $24.8 million as of December 31, 2012 and 2011, respectively.

a. Why would a potential investor or creditor who is considering investing in Harley Davidson be interested in the difference between LIFO and FIFO inventory values?
b. Explain why obsolete inventory is deducted from the carrying value of the asset.
c. Harley Davidson’s effective tax rate is 35 percent. Approximately how much more income tax would the company have paid if at the end of 2012 it switched to FIFO?
d. Discuss why Harley Davidson might resist adoptingIFRS.
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