Question: In its annual report ConocoPhillips reported that the company decreased

In its annual report, ConocoPhillips reported that the company decreased its inventory levels during 2011. ConocoPhillips’s 2011 financial statements contain the following note:
In 2011, a liquidation of LIFO inventory values increased net income attributable to ConocoPhillips $160 million, of which $155 million was attributable to the R&M segment.

1. Explain why the reduction in inventory quantity increased net income for ConocoPhillips.
2. If ConocoPhillips had used FIFO, would the reductions in inventory quantity during the two years have increased net income? Explain.

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