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?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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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?
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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