has maintained a periodic inventory system and the LIFO inventory method for over 20 years. The earnest layers or LIFO inventory of 42,000 beginning inventory (January 1) made up of the following three layers. Units Unit Cost Total Cost 42,000 $20.00 $840,000 35,000 25.00 875,000 7,000 50.00 350,000 $2,065,000 At its December 31 year-end, an involuntary liquidation of beginning inventory occurred. Beginning inventory dropped to 56,000 units. The current replacem a. What is the effect of the LIFO liquidation on after-tax profit or loss assuming a 25% tax rate? $ 393,750 b. What disclosure is required based on the answer to part a? The LIFO liquidation profit of $ 393,750 The effect of the LIFO liquidation is to decrease which in turn, causes taxes to increase Check must be disclosed in the notes to the financial statements. cost of goods sold by $ |

beginning inventory (january 1) made up of the following three layers. At its December 31 year-end, an involuntary liquidation of beginning inventory occurred. Beginning inventory dropped to 56,000 units. The current replacen a. What is the effect of the LIFO liquidation on after-tax profit or loss assuming a 25% tax rate? $ b. What disclosure is required based on the answer to part a? The Lifo liquidation of 5 must be disclosed in the notes to the financial statements. The effect of the Lifo liquidation is to which in turn, causes taxes to