ACCT 200 Lecture 17: ACT-200,University of Arizona, Lecture Notes(p17)
30 Aug 2018
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Lifo has lowest income tax so thats why companies will pick it method of tax avoidance. Rising prices is generally the assumption(shows up on exam) Slides 25 and 26 in chapter 6 are important. Step 2: ending inventory in units = gafs in units - units sold. Method should be used consistently, to enhance comparability. Although consistency is preferred, a company may change its inventory costing method. If the market value of inventory is lower its recorded cost, it must be written down to market value. Applied to items in inventory after the company has used one of the cost flow methods (specific identification, fifo, lifo, or average-cost) to determine cost. Example of conservatism always want to stay on the side of conservatism. 1. high inventory levels - storage costs, interest cost (on funds tied up in inventory), and costs associated with the obsolescence of technical goods or shifts in fashion.
