Southeast Inc. has maintained a periodic inventory system and the LIFO inventory method for over $20$ years. The earliest layers of LIFO inventory of $42,000$ units date back $15$ years. The company had beginning inventory $($January $1)$ made up of the following three layers.

UnitsUnit CostTotal Cost$42,000$$$20\mathrm{.}00$$$840,00035,00025\mathrm{.}00875,0007,00050\mathrm{.}00350,000$$$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 replacement value of inventory is $$50.$

a$.$ What is the effect of the LIFO liquidation on after$-$tax profit or loss assuming a $25\%$ tax rate?$$ $Answer $1$

b$.$ What disclosure is required based on the answer to part a$?$

The LIFO liquidation Answer $2$profitloss

of $Answer $3$

must be disclosed in the notes to the financial statements.

The effect of the LIFO liquidation is toAnswer $4$increasedecrease

Answer $5$sales revenuecost of goods soldother expenses

by $Answer $6$

$,$

which in turn, causes taxes toAnswer $7$increasedecrease

$.$