Supersonic Inc. reported the following information regarding 2007€“2008 inventory.

Note 1 (in part): Nature of Business and Significant Accounting Policies
Inventories€”Inventories are stated at the lower of cost or market. Cost is determined by the last-in, first-out (LIFO) method by the parent company and by the first-in, first-out (FIFO) method by its subsidiaries.

Inventories are stated at the lower of cost determined by the LIFO method or market for Supersonic Inc. Inventories for the two wholly-owned subsidiaries, Supersonic Command Inc. (U.S.) and Supersonic Limited (U.K.) are stated on the FIFO method which amounted to $566,000 at October 31, 2007. No inventory is stated on the FIFO method at October 31, 2008. Included in inventory stated at FIFO cost was $32,815 at October 31, 2007, of Supersonic Command inventory classified as an asset from discontinued operations (see Note 14). If the FIFO method had been used for the entire consolidated group, inventories after an adjustment to the lower-of-cost-or-market, would have been approximately $2,000,000 and $3,800,000 at October 31, 2008 and 2007, respectively.
Inventory has been written down to estimated net realizable value, and results of operations for 2008, 2007, and 2006 include a corresponding charge of approximately $868,000, $960,000, and $273,000, respectively, which represents the excess of LIFO cost over market.
Inventory of $294,546 and $1,468,779 at October 31, 2008 and 2007, respectively, shown on the balance sheet as a noncurrent asset represents that portion of the inventory that is not expected to be sold currently.
Reduction in inventory quantities during the years ended October 31, 2008, 2007, and 2006 resulted in liquidation of LIFO inventory quantities carried at a lower cost prevailing in prior years as compared with the cost of fiscal 2006 purchases. The effect of these reductions was to decrease the net loss by approximately $24,000, $157,000 and $90,000 at October 31, 2008, 2007, and 2006, respectively.

Instructions
(a) Why might Supersonic Inc. use two different methods for valuing inventory?
(b) Comment on why Supersonic Inc. might disclose how its LIFO inventories would be valued under FIFO.
(c) Why does the LIFO liquidation reduce operating costs?
(d) Comment on whether Supersonic would report more or less income if it had been on a FIFO basis for all itsinventory.

Supersonic Inc. 2008 2007 Current assets Cash S 153,010 538,489 Accounts receivable, net of allowance for doubtful accounts of $46,000 in 2005 and $160,000 in 2007 Inventories (Note 2) Other current assets Assets of discontinued operations 1,627,980 2,596,291 1,340,494 1,734,873 90,592 32,815 123,388 3244,872 ,993,06 Total current assets 20082007 Raw materials Work in process Finished goods and display units $1,264,646 $2,321,178 171,222 711,252 240,988 129,406 1,635,040 294,546 3,203,652 1,468,779 Total inventories Less: Amount classified as long-term Current portion $1,340,494 $1,734,873