If Pepper would report according to FIFO method, what would be the reported inventories, net income and COGS amount (show your calculations)? Please comment on why LIFO method could be least preferable (from the company's, government's point of view?
If Pepper would report according to FIFO method, what would be the reported inventories, net income and COGS amount (show your calculations)? Please comment on why LIFO method could be least preferable (from the company's, government's point of view?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![1. Pepper Inc. reports according to GAAP and uses LIFO method to account for inventories.
Tax rate is 25%. Pepper reports the following data (in USD).
2019
19 500
4 200
9 540
2 100
2020
Costs of goods sold
Net income
Inventories
LIFO reserve
23 500
5 000
10 300
2 200
If Pepper would report according to FIFO method, what would be the reported
inventories, net income and COGS amount (show your calculations)?
Please comment on why LIFO method could be least preferable (from the company's,
government's point of view?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fae9301d8-d043-4735-8120-4cec56adc0ec%2F3e0a4f3e-185d-4c29-94f3-926b998f8b05%2Fag0uslh_processed.jpeg&w=3840&q=75)
Transcribed Image Text:1. Pepper Inc. reports according to GAAP and uses LIFO method to account for inventories.
Tax rate is 25%. Pepper reports the following data (in USD).
2019
19 500
4 200
9 540
2 100
2020
Costs of goods sold
Net income
Inventories
LIFO reserve
23 500
5 000
10 300
2 200
If Pepper would report according to FIFO method, what would be the reported
inventories, net income and COGS amount (show your calculations)?
Please comment on why LIFO method could be least preferable (from the company's,
government's point of view?
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