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Warner Borg Is a leading global supplier of highly engineered automotive systems and components primarily for powertrain applications. The following note was contained in its recent annual report: NOTE 3.INVENTORIES, NET aN of December 31 (in millionsm) Current Year $ 321.7 Prior Year $ 282.0 Raw materials and supplies Work in progess Finished goods FIFO inventories 90.2 79.2 117.6 116.8 528.7 478.8 (16.5) $ 462.3 LIFO reserve (18.4) $ 510.3 Total inventories, net Required: 1. What amount of ending inventory would have been reported in the current year if Warner Borg had used only FIFO? (Enter your answer in millions rounded to 1 decimal place.) 2. The cost of goods sold reported by Warner Borg for the current year was $6,598.9 million. Determine the cost of goods sold that would have been reported if Warner Borg had used only FIFO for both years. (Enter your answer in millions rounded to 1 decimal place.) 3. To lower the cash outflows for taxes, which of the following should the Warner Borg management choose to use for certain of its inventories when the costs are rising? 1. Reported ending inventory million 2. Cost of goods sold million 3. Which method should Warner Borg use? Which of the following Is true when a company constructs an asset for Its own use? Multiple Choice Labor and material expenses for construction will increase. Net income will be decreased for capitalized costs of construction. Capitalized interest on construction loans will increase interest expense. Assets will increase for labor, material, and interest costs paid for constructing the asset.

Warner Borg Is a leading global supplier of highly engineered automotive systems and components primarily for powertrain applications. The following note was contained in its recent annual report: NOTE 3.INVENTORIES, NET aN of December 31 (in millionsm) Current Year $ 321.7 Prior Year $ 282.0 Raw materials and supplies Work in progess Finished goods FIFO inventories 90.2 79.2 117.6 116.8 528.7 478.8 (16.5) $ 462.3 LIFO reserve (18.4) $ 510.3 Total inventories, net Required: 1. What amount of ending inventory would have been reported in the current year if Warner Borg had used only FIFO? (Enter your answer in millions rounded to 1 decimal place.) 2. The cost of goods sold reported by Warner Borg for the current year was $6,598.9 million. Determine the cost of goods sold that would have been reported if Warner Borg had used only FIFO for both years. (Enter your answer in millions rounded to 1 decimal place.) 3. To lower the cash outflows for taxes, which of the following should the Warner Borg management choose to use for certain of its inventories when the costs are rising? 1. Reported ending inventory million 2. Cost of goods sold million 3. Which method should Warner Borg use? Which of the following Is true when a company constructs an asset for Its own use? Multiple Choice Labor and material expenses for construction will increase. Net income will be decreased for capitalized costs of construction. Capitalized interest on construction loans will increase interest expense. Assets will increase for labor, material, and interest costs paid for constructing the asset.

FINANCIAL ACCOUNTING
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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Warner Borg Is a leading global supplier of highly engineered automotive systems and components primarily for powertrain applications. The following note was contained in its recent annual report: NOTE 3.INVENTORIES, NET aN of December 31 (in millionsm) Current Year $ 321.7 Prior Year $ 282.0 Raw materials and supplies Work in progess Finished goods FIFO inventories 90.2 79.2 117.6 116.8 528.7 478.8 (16.5) $ 462.3 LIFO reserve (18.4) $ 510.3 Total inventories, net Required: 1. What amount of ending inventory would have been reported in the current year if Warner Borg had used only FIFO? (Enter your answer in millions rounded to 1 decimal place.) 2. The cost of goods sold reported by Warner Borg for the current year was $6,598.9 million. Determine the cost of goods sold that would have been reported if Warner Borg had used only FIFO for both years. (Enter your answer in millions rounded to 1 decimal place.) 3. To lower the cash outflows for taxes, which of the following should the Warner Borg management choose to use for certain of its inventories when the costs are rising? 1. Reported ending inventory million 2. Cost of goods sold million 3. Which method should Warner Borg use?
Transcribed Image Text:Warner Borg Is a leading global supplier of highly engineered automotive systems and components primarily for powertrain applications. The following note was contained in its recent annual report: NOTE 3.INVENTORIES, NET aN of December 31 (in millionsm) Current Year $ 321.7 Prior Year $ 282.0 Raw materials and supplies Work in progess Finished goods FIFO inventories 90.2 79.2 117.6 116.8 528.7 478.8 (16.5) $ 462.3 LIFO reserve (18.4) $ 510.3 Total inventories, net Required: 1. What amount of ending inventory would have been reported in the current year if Warner Borg had used only FIFO? (Enter your answer in millions rounded to 1 decimal place.) 2. The cost of goods sold reported by Warner Borg for the current year was $6,598.9 million. Determine the cost of goods sold that would have been reported if Warner Borg had used only FIFO for both years. (Enter your answer in millions rounded to 1 decimal place.) 3. To lower the cash outflows for taxes, which of the following should the Warner Borg management choose to use for certain of its inventories when the costs are rising? 1. Reported ending inventory million 2. Cost of goods sold million 3. Which method should Warner Borg use?
Which of the following Is true when a company constructs an asset for Its own use? Multiple Choice Labor and material expenses for construction will increase. Net income will be decreased for capitalized costs of construction. Capitalized interest on construction loans will increase interest expense. Assets will increase for labor, material, and interest costs paid for constructing the asset.
Transcribed Image Text:Which of the following Is true when a company constructs an asset for Its own use? Multiple Choice Labor and material expenses for construction will increase. Net income will be decreased for capitalized costs of construction. Capitalized interest on construction loans will increase interest expense. Assets will increase for labor, material, and interest costs paid for constructing the asset.
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