Caterpillar, Inc., is one of the worlds largest manufacturers of construction, mining, and forestry machinery. The following
Question:
Caterpillar, Inc., is one of the world’s largest manufacturers of construction, mining, and forestry machinery. The following disclosure note is included in the company’s 2019 financial statements:
Required:
1. The company reported LIFO cost of goods sold of $36,630 million. Calculate the amount that would be reported for cost of goods sold had Caterpillar used the FIFO inventory method for all of its inventory during 2019.
2. How does the amount in requirement 1 affect income before taxes?
3. Why might the information contained in the disclosure note be useful to a financial analyst?
Transcribed Image Text:
C. Inventories ($ in millions) Inventories are stated at the lower of cost or net realizable value. Cost is principally determined using the last-in, first-out (LIFO) method. The value of inventories on the LIFO basis represented about 60 percent and 65 percent of total inventories at December 31, 2019 and 2018, respectively. If the FIFO (first-in, first- out) method had been in use, inventories would have been $2,086 million and $2,009 million higher than reported at December 31, 2019 and 2018, respectively.
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 50% (4 reviews)
Requirement 1 The note indicates that if the company had used FIFO inventory would have ...View the full answer
Answered By
JAPHETH KOGEI
Hi there. I'm here to assist you to score the highest marks on your assignments and homework. My areas of specialisation are:
Auditing, Financial Accounting, Macroeconomics, Monetary-economics, Business-administration, Advanced-accounting, Corporate Finance, Professional-accounting-ethics, Corporate governance, Financial-risk-analysis, Financial-budgeting, Corporate-social-responsibility, Statistics, Business management, logic, Critical thinking,
So, I look forward to helping you solve your academic problem.
I enjoy teaching and tutoring university and high school students. During my free time, I also read books on motivation, leadership, comedy, emotional intelligence, critical thinking, nature, human nature, innovation, persuasion, performance, negotiations, goals, power, time management, wealth, debates, sales, and finance. Additionally, I am a panellist on an FM radio program on Sunday mornings where we discuss current affairs.
I travel three times a year either to the USA, Europe and around Africa.
As a university student in the USA, I enjoyed interacting with people from different cultures and ethnic groups. Together with friends, we travelled widely in the USA and in Europe (UK, France, Denmark, Germany, Turkey, etc).
So, I look forward to tutoring you. I believe that it will be exciting to meet them.
3.00+
2+ Reviews
10+ Question Solved
Related Book For
Question Posted:
Students also viewed these Business questions
-
Caterpillar, Inc., is one of the world's largest manufacturers of construction, mining, and forestry machinery. The following disclosure note is included in the company's 2015 financial statements:...
-
Planning is one of the most important management functions in any business. A front office managers first step in planning should involve determine the departments goals. Planning also includes...
-
Required a. Use professional judgment in deciding on the preliminary judgment about materiality for earnings, current assets, current liabilities, and total assets. Your conclusions should be stated...
-
What responsibilities can a Crew Boss delegate to a subordinate supervisor? (Select all that apply) Re-supplying crew and equipment Communicating crew wake up time for next operational period...
-
Does economic growth result from increases in aggregate demand, short-run aggregate supply, or long-run aggregate supply?
-
Do you have an Instagram account? If so, how often do you visit the site? Data for 247 Instagram users are described by the frequency bar graph in Fig. 10. a. What variable is described by the bar...
-
You just received an unexpected bonus at work of \($10,000.\) While you plan on using a bit of it to celebrate by purchasing all the accounting books you ever dreamed of, how much should you deposit...
-
Software Distributors reports net income of $65,000. Included in that number is depreciation expense of $15,000 and a loss on the sale of land of $6,000. A comparison of this years and last years...
-
Selected current year-end financial statements of Cabot Corporation follow. (All sales were on credit; selected balance sheet amounts at December 31 of the prior year were inventory, $50,900; total...
-
A fast-food restaurant sells hamburgers and chicken sandwiches. On a typical weekday the demand for hamburgers is normally distributed with mean 313 and standard deviation 57; the demand for chicken...
-
The December 31, 2024, year-end inventory balance of the Almond Corporation is $210,000. You have been asked to review the following transactions to determine if they have been correctly recorded. 1....
-
The bank statement for the checking account of Management Systems Inc. (MSI) showed a December 31, 2024, balance of $14,632.12. Information that might be useful in preparing a bank reconciliation is...
-
Temperature and pressure are directly proportional to each other. This means that as the temperature decreases, the pressure also decreases; and as the temperature increases, the pressure increases....
-
A positive test charge of magnitude 1 C is placed at the point P . If the point P is located 1 . 7 cm to the left of a 7 . 1 C charge, what is the magnitude and direction of the electric field at P ?
-
A soccer ball has a mass of 0 . 4 2 kg when it is kicked from rest by a foot that has a mass of 5 . 9 kg . The coefficient of restitution between the ball and the foot is 0 . 7 2 and the final...
-
Rudy (48) takes a $30,000 distribution from his IRA to pay some of his daughter's $56,000 qualified education expenses at an eligible educational institution. His daughter paid $35,000 of her...
-
A patient is imaged using a 256 x 256 image matrix on a GC with a rectangular, 40 cm by 55 cm, field of view (FOV). Calculate the dimensions (length and breadth) of each rectangular pixel of the...
-
Lifting cable danger. Cranes are used to lift steel beams at construction sites (Figure a). Let's look at the danger in such a lift for a beam with length L = 13.5 m, a square cross-section with edge...
-
What is wrong with the chemical formula for each of the following compounds: (a) (NH3)2CO3 (ammonium carbonate), (b) CaOH (calcium hydroxide), (c) CdSO3 (cadmium sulfi de), (d) ZnCrO4 (zinc...
-
Why is a help desk and production support critical to system implementations? Discuss its interrelationship with the problem management and reporting system.
-
The company controller, Barry Melrose, has asked for your help in interpreting the authoritative accounting literature that addresses the recognition and measurement of impairment losses for...
-
The company controller, Barry Melrose, has asked for your help in interpreting the authoritative accounting literature that addresses the recognition and measurement of impairment losses for...
-
At the beginning of 2009, the Healthy Life Food Company purchased equipment for $42 million to be used in the manufacture of a new line of gourmet frozen foods. The equipment was estimated to have a...
-
Again, as a consultant to Mr. Entrepreneur, you are asked to rank the proposals using the IRR (Internal Rate of Return) method. Which project should be selected under the IRR approach? What is the...
-
A mortgage of $300,000 is to be repaid over a 25 year period at a fixed annual interest rate of 4.5%. Calculate the monthly repayments. Now suppose the potential purchaser of the mortgage can afford...
-
Give an overview of the company. Choose the type of firm, the banking structure of the firm in terms of current and past investments, what industry it is in, and any relevant history or background...
Study smarter with the SolutionInn App