An annual report for National Paper Company included the following note: The last-in, first-out inventory method is used to value most of National Paper's U.S. inventories... If the first-in, first-out method had been used, it would have increased total inventory balances by approximately $303.0 million and $240.0 million at December 31, 2017, and 2016, respectively. For the year 2017, National Paper Company reported net income (after taxes) of $2,444.0 million. At December 31, 2017, the balance of National Paper Company's retained earnings account was $6,180 million.
An annual report for National Paper Company included the following note: The last-in, first-out inventory method is used to value most of National Paper's U.S. inventories... If the first-in, first-out method had been used, it would have increased total inventory balances by approximately $303.0 million and $240.0 million at December 31, 2017, and 2016, respectively. For the year 2017, National Paper Company reported net income (after taxes) of $2,444.0 million. At December 31, 2017, the balance of National Paper Company's retained earnings account was $6,180 million.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
43.
Subject :- Accounting
![Required information
[The following information applies to the questions displayed below.]
An annual report for National Paper Company included the following note:
The last-in, first-out inventory method is used to value most of National Paper's U.S. inventories... If the first-in, first-out
method had been used, it would have increased total inventory balances by approximately $303.0 million and $240.0
million at December 31, 2017, and 2016, respectively.
For the year 2017, National Paper Company reported net income (after taxes) of $2,444.0 million. At December 31, 2017,
the balance of National Paper Company's retained earnings account was $6,180 million.
3. Use of the LIFO method reduced the amount of taxes that National Paper had to pay in 2017 compared with the amount that would
have been paid if National Paper had used FIFO. Calculate the amount of this reduction (assume a 30 percent tax rate). (Enter your
answer in millions rounded to 1 decimal place.)
Reduction in taxes
million](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd7b6ce77-7d1f-42c7-90fc-6e082dc1db1b%2F53034395-6f2a-45d5-8096-70fc348f7535%2Fzgt4pxr_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Required information
[The following information applies to the questions displayed below.]
An annual report for National Paper Company included the following note:
The last-in, first-out inventory method is used to value most of National Paper's U.S. inventories... If the first-in, first-out
method had been used, it would have increased total inventory balances by approximately $303.0 million and $240.0
million at December 31, 2017, and 2016, respectively.
For the year 2017, National Paper Company reported net income (after taxes) of $2,444.0 million. At December 31, 2017,
the balance of National Paper Company's retained earnings account was $6,180 million.
3. Use of the LIFO method reduced the amount of taxes that National Paper had to pay in 2017 compared with the amount that would
have been paid if National Paper had used FIFO. Calculate the amount of this reduction (assume a 30 percent tax rate). (Enter your
answer in millions rounded to 1 decimal place.)
Reduction in taxes
million
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