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a. Determine the necessary adjustments to the following balance sheet line items for 2019. Note: Round your answers to the nearest whole dollar. Adjustment ($ in millions) 4,085 4,085 899 1,529 x Inventories $ Total assets $ Deferred tax liabilities $ Equity $ b. Determine the necessary adjustments to the following income statement line items for 2019. Note: Round your answers to the nearest whole dollar. Adjustment ($ in millions) (1,330) 1,330 293 1,037 Cost of goods sold $ Pretax income $ Income tax expense $ Net income $ c. Compute the common-size inventories percentage with LIFO and with FIFO for 2019. Hint: Compute inventory as percent of total assets. Note: Round the percentage to one decimal place (for example, enter 14.6% for 14.55555%). Common size inventories percentage with LIFO for 2019 Common size inventories percentage with FIFO for 2019 Do we believe the difference is material? Yes 6.4% 12.8%

a. Determine the necessary adjustments to the following balance sheet line items for 2019. Note: Round your answers to the nearest whole dollar. Adjustment ($ in millions) 4,085 4,085 899 1,529 x Inventories $ Total assets $ Deferred tax liabilities $ Equity $ b. Determine the necessary adjustments to the following income statement line items for 2019. Note: Round your answers to the nearest whole dollar. Adjustment ($ in millions) (1,330) 1,330 293 1,037 Cost of goods sold $ Pretax income $ Income tax expense $ Net income $ c. Compute the common-size inventories percentage with LIFO and with FIFO for 2019. Hint: Compute inventory as percent of total assets. Note: Round the percentage to one decimal place (for example, enter 14.6% for 14.55555%). Common size inventories percentage with LIFO for 2019 Common size inventories percentage with FIFO for 2019 Do we believe the difference is material? Yes 6.4% 12.8%

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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note: the answer for EQUITY is NOT 1,529 or 1,037.

Adjusting Balance Sheet and Income Statement for LIFO to FIFO In its December 2019 10-K, Phillips 66 reported the following information ($ millions). 2019 Assets 2019 Inventories 2019 LIFO Reserve 2018 LIFO Reserve Tax Rate $55,784 $3,587 $4,085 $2,755 22% a. Determine the necessary adjustments to the following balance sheet line items for 2019. Note: Round your answers to the nearest whole dollar. Adjustment ($ in millions) 4,085 4,085 899 1,529 x Inventories $ Total assets $ Deferred tax liabilities $ Equity $ b. Determine the necessary adjustments to the following income statement line items for 2019. Note: Round your answers to the nearest whole dollar. Cost of goods sold Pretax income Adjustment ($ in millions) (1,330) 1,330 293 1,037 $ $ Income tax expense $ Net income $ c. Compute the common-size inventories percentage with LIFO and with FIFO for 2019. Hint: Compute inventory as percent of total assets. Note: Round the percentage to one decimal place (for example, enter 14.6% for 14.55555%). Common size inventories percentage with LIFO for 2019 Common size inventories percentage with FIFO for 2019 Do we believe the difference is material? Yes 6.4% ✔ 12.8%
Transcribed Image Text:Adjusting Balance Sheet and Income Statement for LIFO to FIFO In its December 2019 10-K, Phillips 66 reported the following information ($ millions). 2019 Assets 2019 Inventories 2019 LIFO Reserve 2018 LIFO Reserve Tax Rate $55,784 $3,587 $4,085 $2,755 22% a. Determine the necessary adjustments to the following balance sheet line items for 2019. Note: Round your answers to the nearest whole dollar. Adjustment ($ in millions) 4,085 4,085 899 1,529 x Inventories $ Total assets $ Deferred tax liabilities $ Equity $ b. Determine the necessary adjustments to the following income statement line items for 2019. Note: Round your answers to the nearest whole dollar. Cost of goods sold Pretax income Adjustment ($ in millions) (1,330) 1,330 293 1,037 $ $ Income tax expense $ Net income $ c. Compute the common-size inventories percentage with LIFO and with FIFO for 2019. Hint: Compute inventory as percent of total assets. Note: Round the percentage to one decimal place (for example, enter 14.6% for 14.55555%). Common size inventories percentage with LIFO for 2019 Common size inventories percentage with FIFO for 2019 Do we believe the difference is material? Yes 6.4% ✔ 12.8%
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