Southeast Inc. has maintained a periodic inventory system and the LIFO inventory method for over 20 years. The earliest layers of LIFO inventory of 48,000 units date back years. The company had beginning inventory (January 1) made up of the following three layers. Units Unit Cost Total Cost 48,000 $20.00 $960,000 40,000 25.00 1,000,000 8,000 50.00 400,000 $2,360,000 At its December 31 year-end, an involuntary liquidation of beginning inventory occurred. Beginning inventory dropped to 64,000 units. The current replacement value of inventory is $50. a. What is the effect of the LIFO liquidation on after-tax profit or loss assuming a 25% tax rate? $ 750,000 x b. What disclosure is required based on the answer to part a? The LIFO liquidation profit of $ 0 The effect of the LIFO liquidation is to decrease which in turn, causes taxes to increase ✔ x must be disclosed in the notes to the financial statements. ✓ cost of goods sold ✔ by $ 0

Southeast Inc. has maintained a periodic inventory system and the LIFO inventory method for over 20 years. The earliest layers of LIFO inventory of 48,000 units date back years. The company had beginning inventory (January 1) made up of the following three layers. Units Unit Cost Total Cost 48,000 $20.00 $960,000 40,000 25.00 1,000,000 8,000 50.00 400,000 $2,360,000 At its December 31 year-end, an involuntary liquidation of beginning inventory occurred. Beginning inventory dropped to 64,000 units. The current replacement value of inventory is $50. a. What is the effect of the LIFO liquidation on after-tax profit or loss assuming a 25% tax rate? $ 750,000 x b. What disclosure is required based on the answer to part a? The LIFO liquidation profit of $ 0 The effect of the LIFO liquidation is to decrease which in turn, causes taxes to increase ✔ x must be disclosed in the notes to the financial statements. ✓ cost of goods sold ✔ by $ 0

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Description: please dont provide answer in an image format thank you Southeast Inc. has maintained a periodic inventory system and the LIFO inventory method for over 20 years. The earliest layers of LIFO inventory of 48,000 units date back 15years. The company ha

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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