In its December 2017 10-K, General Electric Inc. reported the following information (5 millions). 

Required: 

a. If FIFO method were used, determine the necessary adjustments to the following balance sheet line items. 

(1) Inventories 

(2) Total assets 

(3) Tax liabilities 

(4) Equity 

b. If FIFO method were used, determine the necessary adjustments to the following income statement line items. 

(1) Cost of goods sold 

(2) Pretax income 

(3) Income tax expense 

(4) Net Income 

c. Compute the common-size inventories with LIFO and with FIFO. (Hint: Compute inventory as percent of total assets.) Do you think the difference is material?

Transcribed Image Text:

2017 Assets 2017 inventories 2017 LIFO reserve 2016 LIFO Reserves Tax Rate $377,945 $21,923 $(516) $(383) 35% 2017 Assets 2017 inventories 2017 LIFO reserve 2016 LIFO Reserves Tax Rate $377,945 $21,923 $(516) $(383) 35%

Answer rating: 100% (QA)

a if FIFO method used following adjustments need to be done 1 Invnentory value will be dec... View the full answer