In 2021, Gail changed from the lower of cost or market FIFO method to the LIFO inventory

Question:

In 2021, Gail changed from the lower of cost or market FIFO method to the LIFO inventory method. The ending inventory for 2020 was:

Item C was damaged goods, and the replacement cost used was actually the estimated selling price of the goods. The actual cost to replace item C was $32,000.

a. What is the correct beginning inventory for 2021 under the LIFO method?

b. What immediate tax consequences (if any) will result from the switch to LIFO?

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South-Western Federal Taxation 2022 Individual Income Taxes

ISBN: 9780357519073

45th Edition

Authors: James C. Young, Annette Nellen, William A. Raabe, Mark Persellin, William H. Hoffman

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Question Posted: Jul 15, 2022 05:39 AM

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In 2021, Gail changed from the lower of cost or market FIFO method to the LIFO inventory

Question:

Item A B с FIFO Cost $26,000 52,000 30,000 Replacement Cost $15,000 55,000 7,000 Lower of Cost or Market $15,000 52,000 7,000 $74,000

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Answer and Explanation A Total cost of inventory as per ...View the full answer

South-Western Federal Taxation 2022 Individual Income Taxes

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