1. What critical assumptions has TESLA made to value inventory? Does TESLA use FIFO or LIFO? Explain what is LCM (the lower of cost or market) and how this may impact inventory every year.

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Cost of revenues A B C 2019 2018 Automotive sales 15,939 13,686 Automotive leasing 459 488 Energy generation & storage 1,341 1,365 Services & other 2,770 1,880 Total: 20,509 17,419 Inventory Raw Materials Work in process Finished goods Service parts Total: 1,428 932 362 297 1,356 1,581 406 303 3,552 3,113 3 Days Inventory calculation excluding service parts inventory Automotive sales 15,939 13,686 O Automotive leasing Total cost of revenues used 459 488 Energy generation & storage 1,341 1,365 17,739 15,539 Total Inventory 3,552 3,113 Exclude: Service parts (406) (303) Total Inventory used 3,146 2,810 Days inventory excl services 64.7 66.0 Cost of revenues A B C 2019 2018 Automotive sales 15,939 13,686 Automotive leasing 459 488 Energy generation & storage 1,341 1,365 Services & other 2,770 1,880 Total: 20,509 17,419 Inventory Raw Materials Work in process Finished goods Service parts Total: 1,428 932 362 297 1,356 1,581 406 303 3,552 3,113 3 Days Inventory calculation excluding service parts inventory Automotive sales 15,939 13,686 O Automotive leasing Total cost of revenues used 459 488 Energy generation & storage 1,341 1,365 17,739 15,539 Total Inventory 3,552 3,113 Exclude: Service parts (406) (303) Total Inventory used 3,146 2,810 Days inventory excl services 64.7 66.0

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TESLA has made the critical assumption of using the FIFO FirstInFirstOut method to value its i... View the full answer