A company may purchase a portion of its inventory at different prices over time. For example it
Question:
A company may purchase a portion of its inventory at different prices over time. For example it may purchase one shipment at $10 per unit and another shipment at $15 per unit later in the year. When the company then subsequently sells some of the inventory (e.g. $20 per unit), GAAP requires the company to be consistent in the method used for inventory costing.
What financial statement impact (i.e. balance sheet & income statement) would you anticipate if the company selects a method that treats the units sold as coming from the first shipment instead of the second shipment? Would this accounting choice be something the CEO/CFO may want to do if they were permitted to do so?
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill