Chemical Boost, Inc. isa manufacturer of TA5 chemical and derivative products. Presented below is select information from
Question:
Chemical Boost, Inc. isa manufacturer of TA5 chemical and derivative products. Presented below is select information from Chemical Boost’s recent annual cas soy report.
The footnotes to the company’s financial statements revealed that Chemical Boost, Inc. values most of its inventory using LIFO. The LIFO reserve was approximately \($600\) million and \($300\) million, respectively, at year-end 2015 and 2014. Assume an effective tax rate of 26%.
Required
1. If Chemical Boost, Inc. had used FIFO instead of LIFO to value its inventory, what value would have been reported for 2015 for the following accounts?
a. Ending inventory
c. Net income before tax
b. Cost of goods sold
d. Retained earnings
2. How much additional income tax would the company have paid if it had used FIFO instead of LIFO to value its inventory?
Step by Step Answer:
Financial Accounting For Executives And MBAs
ISBN: 9781618531988
4th Edition
Authors: Wallace, Simko, Ferris