Supplement A Analyzing LIFO and FIFO When Inventory Quantities Decline Based on an Actual Note In a recent annual report,
Based on an Actual Note In a recent annual report, General Electric reported the following in its inventory note:
It also reported a $23 million change in cost of goods sold due to lower inventory levels.
1. Compute the increase or decrease in the pretax operating profit (loss) that would have been reported for the current year had GE employed FIFO accounting for all inventory for both years.
2. Compute the increase or decrease in pretax operating profit that would have been reported had GE employed LIFO but not reduced inventory quantities during the currentyear.
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