Woollyworm, Incorporated, is one of the world's largest manufacturers of construction, mining, and forestry machinery. The following disclosure note is included in the company's 2019 financial statements: C. Inventories ($ in millions) Inventories are stated at the lower of cost or net realizable value. Cost is principally determined using the last-in, first-out (LIFO) method. The value of inventories on the LIFO basis represented about 60 percent and 65 percent of total inventories at December 31, 2019 and 2018, respectively. If the FIFO (first-in, first-out) method had been in use, inventories would have been $2,122 million and $2,027 million higher than reported at December 31, 2019 and 2018, respectively. Required: 1. The company reported LIFO cost of goods sold of $36,900 million. Calculate the amount that would be reported for cost of goods sold had Woollyworm used the FIFO inventory method for all of its inventory during 2019. 2. Using the cost of goods sold calculated in requirement 1, how much higher (lower) would income before taxes be, if Woollyworm had used the FIFO inventory method for all of its inventory? Complete this question by entering your answers in the tabs below. Required 1 Required 2 The company reported LIFO cost of goods sold of $36,900 million. Calculate the amount that would be reported for cost of goods sold had Woollyworm used the FIFO inventory method for all of its inventory during 2019. Note: Enter your answer in millions.
Woollyworm, Incorporated, is one of the world's largest manufacturers of construction, mining, and forestry machinery. The following disclosure note is included in the company's 2019 financial statements: C. Inventories ($ in millions) Inventories are stated at the lower of cost or net realizable value. Cost is principally determined using the last-in, first-out (LIFO) method. The value of inventories on the LIFO basis represented about 60 percent and 65 percent of total inventories at December 31, 2019 and 2018, respectively. If the FIFO (first-in, first-out) method had been in use, inventories would have been $2,122 million and $2,027 million higher than reported at December 31, 2019 and 2018, respectively. Required: 1. The company reported LIFO cost of goods sold of $36,900 million. Calculate the amount that would be reported for cost of goods sold had Woollyworm used the FIFO inventory method for all of its inventory during 2019. 2. Using the cost of goods sold calculated in requirement 1, how much higher (lower) would income before taxes be, if Woollyworm had used the FIFO inventory method for all of its inventory? Complete this question by entering your answers in the tabs below. Required 1 Required 2 The company reported LIFO cost of goods sold of $36,900 million. Calculate the amount that would be reported for cost of goods sold had Woollyworm used the FIFO inventory method for all of its inventory during 2019. Note: Enter your answer in millions.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Woollyworm, Incorporated, is one of the world's largest manufacturers of construction, mining, and forestry machinery. The following
disclosure note is included in the company's 2019 financial statements:
C. Inventories ($ in millions)
Inventories are stated at the lower of cost or net realizable value. Cost is principally determined using the last-in, first-out (LIFO)
method. The value of inventories on the LIFO basis represented about 60 percent and 65 percent of total inventories at December 31,
2019 and 2018, respectively. If the FIFO (first-in, first-out) method had been in use, inventories would have been $2,122 million and
$2,027 million higher than reported at December 31, 2019 and 2018, respectively.
Required:
1. The company reported LIFO cost of goods sold of $36,900 million. Calculate the amount that would be reported for cost of
goods sold had Woollyworm used the FIFO inventory method for all of its inventory during 2019.
2. Using the cost of goods sold calculated in requirement 1, how much higher (lower) would income before taxes be, if Woollyworm
had used the FIFO inventory method for all of its inventory?
Complete this question by entering your answers in the tabs below.
Required 1
Required 2
The company reported LIFO cost of goods sold of $36,900 million. Calculate the amount that would be reported for cost of
goods sold had Woollyworm used the FIFO inventory method for all of its inventory during 2019.
Note: Enter your answer in millions.
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