Costco Wholesale Corporation operates membership warehouses. As of August 30, 2015 Costco operated 686 warehouses, with 480 in the United States.

In addition, the store sells merchandise through its website costco.com. Using selected parts of Costco’s 2015 10-K report, answer the questions below. (The year 2015 refers to the year ending August 30, 2015. The effective tax rate is 33.2 percent.)

Required
1. Was 2015 a good year or a bad year for Costco Corporation? Why?
2. Costco Corporation accounts for its U.S. inventory and the related cost of goods sold using the last-in, first-out (LIFO) method. Inventory is stated at the lower of LIFO cost or market. The cumulative LIFO inventory reserve was \($82\) million and \($109\) million at year-end 2015 and 2014, respectively. Estimate the income before income taxes in 2015 assuming the company used FIFO to value its inventory.

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(in millions) Assets Current assets COSTCO WHOLESALE CORPORATION Consolidated Balance Sheets August 30, 2015 August 31, 2014 Cash and cash equivalents. $ 4,801 $ 5,738 Short-term investments 1,618 1,577 Receivables, net. 1,224 1,148 Inventory.. 8,908 8,456 Deferred income taxes and other current assets. 748 669 Total current assets. 17,299 17,588 Property, plant, and equipment, net. 15,401 14,830 Other assets... 740 606 Total assets. $33,440 $33,024 Liabilities Current liabilities Accounts payable... $ 9,011 $ 8,491 Current portion of long-term debt 1,283 0 Other current liabilities 6,246 5,921 Total current liabilities. 16,540 14,412 Long-term debt 4,864 5,093 Deferred income taxes and other liabilities 1,193 1,004 Total liabilities 22,597 20,509 Equity Preferred stock.. $ 0 $ 0 Common stock. 2 2 Additional paid-in capital.. 5,218 4,919 Accumulated other comprehensive income. Retained earnings (1,121) (76) Noncontrolling interests. Total equity so 6,518 226 7,458 212 Total liabilities and equity. 10,843 12,515 $33,440 $33,024