In its annual report, ConocoPhillips reported that the company decreased its inventory levels during 2011 ConocoPhillipss 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 $...

Req 1 This actual footnote from ConocoPhillips illustrates the impact of dipping into a LIFO layer U ...

In its annual report, ConocoPhillips reported that the company decreased its inventory levels during 2011. ConocoPhillipss 2011

Question:

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

Required:
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.

Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial... Liquidation
Liquidation in finance and economics is the process of bringing a business to an end and distributing its assets to claimants. It is an event that usually occurs when a company is insolvent, meaning it cannot pay its obligations when they are due....