Given: In January 2017, S Inc. requested and secured permission from the commissioner of the Internal Revenue Service to compute inventories under the last-in first-out (LIFO) method and elected to determine inventory cost under the dollar-value LIFO method. Susquehanna Inc. satisfied the commissioner that cost could be accurately determined by use of an index number computed from a representative sample selected from the company’s single inventory pool. (a) To explain: Why should inventories be included in a balance sheet and computation of net income?

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Answer 1

Question

Process of recording, summarizing, and analyzing financial information to prepare financial statements, and making them available to stakeholders, thereby enabling them to make an informed decision about the company. Financial reporting is an extension of financial accounting that deals with the presentation of financial information in accordance with the requirements of prescribed accounting standards.

Chapter 8, Problem 5CA

To determine

Given: In January 2017, S Inc. requested and secured permission from the commissioner of the Internal Revenue Service to compute inventories under the last-in first-out (LIFO) method and elected to determine inventory cost under the dollar-value LIFO method. Susquehanna Inc. satisfied the commissioner that cost could be accurately determined by use of an index number computed from a representative sample selected from the company’s single inventory pool.

(a) To explain: Why should inventories be included in a balance sheet and computation of net income?

To determine

(b) To discuss: The Internal Revenue Code allows some accountable events to be considered differently for income tax reporting purposes and financial accounting purposes, while other accountable events must be reported the same for both purposes. Discuss why it might be desirable to report some accountable events differently for financial accounting purposes than for income tax reporting purposes.

To determine

(c) To discuss: The ways and conditions under which the FIFO and LIFO inventory costing methods produce different inventory valuations. Do not discuss procedures for computing inventory cost.

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Answer 2

Question

Process of recording, summarizing, and analyzing financial information to prepare financial statements, and making them available to stakeholders, thereby enabling them to make an informed decision about the company. Financial reporting is an extension of financial accounting that deals with the presentation of financial information in accordance with the requirements of prescribed accounting standards.

Chapter 8, Problem 5CA

To determine

Given: In January 2017, S Inc. requested and secured permission from the commissioner of the Internal Revenue Service to compute inventories under the last-in first-out (LIFO) method and elected to determine inventory cost under the dollar-value LIFO method. Susquehanna Inc. satisfied the commissioner that cost could be accurately determined by use of an index number computed from a representative sample selected from the company’s single inventory pool.

(a) To explain: Why should inventories be included in a balance sheet and computation of net income?

To determine

(b) To discuss: The Internal Revenue Code allows some accountable events to be considered differently for income tax reporting purposes and financial accounting purposes, while other accountable events must be reported the same for both purposes. Discuss why it might be desirable to report some accountable events differently for financial accounting purposes than for income tax reporting purposes.

To determine

(c) To discuss: The ways and conditions under which the FIFO and LIFO inventory costing methods produce different inventory valuations. Do not discuss procedures for computing inventory cost.

Expert Solution & Answer

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Answer 3

Question

Process of recording, summarizing, and analyzing financial information to prepare financial statements, and making them available to stakeholders, thereby enabling them to make an informed decision about the company. Financial reporting is an extension of financial accounting that deals with the presentation of financial information in accordance with the requirements of prescribed accounting standards.

Chapter 8, Problem 5CA

To determine

Given: In January 2017, S Inc. requested and secured permission from the commissioner of the Internal Revenue Service to compute inventories under the last-in first-out (LIFO) method and elected to determine inventory cost under the dollar-value LIFO method. Susquehanna Inc. satisfied the commissioner that cost could be accurately determined by use of an index number computed from a representative sample selected from the company’s single inventory pool.

(a) To explain: Why should inventories be included in a balance sheet and computation of net income?

To determine

(b) To discuss: The Internal Revenue Code allows some accountable events to be considered differently for income tax reporting purposes and financial accounting purposes, while other accountable events must be reported the same for both purposes. Discuss why it might be desirable to report some accountable events differently for financial accounting purposes than for income tax reporting purposes.

To determine

(c) To discuss: The ways and conditions under which the FIFO and LIFO inventory costing methods produce different inventory valuations. Do not discuss procedures for computing inventory cost.

Expert Solution & Answer

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Answer 4

Question

Process of recording, summarizing, and analyzing financial information to prepare financial statements, and making them available to stakeholders, thereby enabling them to make an informed decision about the company. Financial reporting is an extension of financial accounting that deals with the presentation of financial information in accordance with the requirements of prescribed accounting standards.

Chapter 8, Problem 5CA

To determine

Given: In January 2017, S Inc. requested and secured permission from the commissioner of the Internal Revenue Service to compute inventories under the last-in first-out (LIFO) method and elected to determine inventory cost under the dollar-value LIFO method. Susquehanna Inc. satisfied the commissioner that cost could be accurately determined by use of an index number computed from a representative sample selected from the company’s single inventory pool.

(a) To explain: Why should inventories be included in a balance sheet and computation of net income?

To determine

(b) To discuss: The Internal Revenue Code allows some accountable events to be considered differently for income tax reporting purposes and financial accounting purposes, while other accountable events must be reported the same for both purposes. Discuss why it might be desirable to report some accountable events differently for financial accounting purposes than for income tax reporting purposes.

To determine

(c) To discuss: The ways and conditions under which the FIFO and LIFO inventory costing methods produce different inventory valuations. Do not discuss procedures for computing inventory cost.

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Answer 5

Chapter 8, Problem 5CA

To determine

Given: In January 2017, S Inc. requested and secured permission from the commissioner of the Internal Revenue Service to compute inventories under the last-in first-out (LIFO) method and elected to determine inventory cost under the dollar-value LIFO method. Susquehanna Inc. satisfied the commissioner that cost could be accurately determined by use of an index number computed from a representative sample selected from the company’s single inventory pool.

(a) To explain: Why should inventories be included in a balance sheet and computation of net income?

To determine

(b) To discuss: The Internal Revenue Code allows some accountable events to be considered differently for income tax reporting purposes and financial accounting purposes, while other accountable events must be reported the same for both purposes. Discuss why it might be desirable to report some accountable events differently for financial accounting purposes than for income tax reporting purposes.

To determine

(c) To discuss: The ways and conditions under which the FIFO and LIFO inventory costing methods produce different inventory valuations. Do not discuss procedures for computing inventory cost.

Answer 6

Chapter 8, Problem 5CA

To determine

Given: In January 2017, S Inc. requested and secured permission from the commissioner of the Internal Revenue Service to compute inventories under the last-in first-out (LIFO) method and elected to determine inventory cost under the dollar-value LIFO method. Susquehanna Inc. satisfied the commissioner that cost could be accurately determined by use of an index number computed from a representative sample selected from the company’s single inventory pool.

(a) To explain: Why should inventories be included in a balance sheet and computation of net income?

Answer 7

Chapter 8, Problem 5CA

To determine

Given: In January 2017, S Inc. requested and secured permission from the commissioner of the Internal Revenue Service to compute inventories under the last-in first-out (LIFO) method and elected to determine inventory cost under the dollar-value LIFO method. Susquehanna Inc. satisfied the commissioner that cost could be accurately determined by use of an index number computed from a representative sample selected from the company’s single inventory pool.

(a) To explain: Why should inventories be included in a balance sheet and computation of net income?

Answer 8

To determine

(b) To discuss: The Internal Revenue Code allows some accountable events to be considered differently for income tax reporting purposes and financial accounting purposes, while other accountable events must be reported the same for both purposes. Discuss why it might be desirable to report some accountable events differently for financial accounting purposes than for income tax reporting purposes.

Answer 9

To determine

(b) To discuss: The Internal Revenue Code allows some accountable events to be considered differently for income tax reporting purposes and financial accounting purposes, while other accountable events must be reported the same for both purposes. Discuss why it might be desirable to report some accountable events differently for financial accounting purposes than for income tax reporting purposes.

Answer 10

To determine

(c) To discuss: The ways and conditions under which the FIFO and LIFO inventory costing methods produce different inventory valuations. Do not discuss procedures for computing inventory cost.

Answer 11

To determine

(c) To discuss: The ways and conditions under which the FIFO and LIFO inventory costing methods produce different inventory valuations. Do not discuss procedures for computing inventory cost.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 8 - Prob. 1Q Ch. 8 - 2. Why should inventories be included in (a) a...Ch. 8 - 3. What is the difference between a perpetual...Ch. 8 - Prob. 4Q Ch. 8 - Prob. 5Q Ch. 8 - Prob. 6Q Ch. 8 - Prob. 7Q Ch. 8 - Prob. 8Q Ch. 8 - Prob. 9Q Ch. 8 - Prob. 10Q

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(c) To discuss: The ways and conditions under which the FIFO and LIFO inventory costing methods produce different inventory valuations. Do not discuss procedures for computing inventory cost.

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