An annual report for International Paper Company included the following note: The last-in, first-out inventory method is used to value most of International Paper’s U.S. inventories . . . If the first-in, first-out method had been used, it would have increased total inventory balances by approximately $293 million and $290 million at December 31, 2017, and 2016, respectively.For the year 2017, International Paper Company reported net income (after taxes) of $2,144 million. At December 31, 2017, the balance of International Paper Company’s retained earnings account was $6,180 million. 2. Determine the amount of retained earnings that International Paper would have reported at the end of 2017 if it always had usedthe FIFO method (assume a 30 percent tax rate). (Enter your answer in millions. Do not round your intermediate calculations.Round your final answer to the nearest whole number.) 3. Use of the LIFO method reduced the amount of taxes that International Paper had to pay in 2017 compared with the amount thatwould have been paid if International 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.)

Name: An annual report for International Paper Company included the followin
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Description: An annual report for International Paper Company included the following note: The last-in, first-out inventory method is used to value most of International Paper’s U.S. inventories . . . If the first-in, first-out method had been used, it would have

Retained earnings shows that the company has accumulated its income over a period of time. It is…

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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An annual report for International Paper Company included the following note:

The last-in, first-out inventory method is used to value most of International Paper’s U.S. inventories . . . If the first-in, first-out method had been used, it would have increased total inventory balances by approximately $293 million and $290 million at December 31, 2017, and 2016, respectively.

For the year 2017, International Paper Company reported net income (after taxes) of $2,144 million. At December 31, 2017, the balance of International Paper Company’s retained earnings account was $6,180 million.

2. Determine the amount of retained earnings that International Paper would have reported at the end of 2017 if it always had used
the FIFO method (assume a 30 percent tax rate). (Enter your answer in millions. Do not round your intermediate calculations.
Round your final answer to the nearest whole number.)

3. Use of the LIFO method reduced the amount of taxes that International Paper had to pay in 2017 compared with the amount that
would have been paid if International 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.)

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