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dybincka [34]
2 years ago
15

GG Inc. uses LIFO. GG disclosed that if FIFO had been used, inventory at the end of 2021 would have been $16 million higher than

the difference between LIFO and FIFO at the end of 2020. Assuming GG has a 25% income tax rate:
Business
1 answer:
g100num [7]2 years ago
3 0

Answer:

In a situation where FIFO had been used, its reported net income for 2020 would have been $12 million higher than using LIFO for its financial statements.

Explanation:

The Ending Inventory of 2020 would have been $16 million higher in a case where FIFO had been used.

Hence, The Higher ending inventory will tend to means the lower cost of goods sold as well as the higher income which means that if FIFO had been used,the income of 2020 would have been higher by $16 million.

Income tax rate = 25%

The first step is to calculate for the Increase in Income tax expense

Using this formula to calculate for the Increase in Income tax expense

Increase in Income tax expense = Increase in Income x Income tax rate

Let plug in the formula

Increase in Income tax expense= 16 x 25%

Increase in Income tax expense= $4 million

The second step is to calculate for the Increase in Income net income

Using this formula

Increase in net income = Increase in income - Increase in Income tax expense

Let plug in the formula

Increase in net income = 16 - 4

Increase in net income = $12 million

Therefore in a situation where FIFO had been used, its reported net income for 2020 would have been $12 million higher than using LIFO for its financial statements.

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3 years ago
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2 years ago
Nonprofit organizations differ from profit organizations in that nonprofit organizations: Group of answer choices
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The correct answer is <em>must often target those who are apathetic about or strongly opposed to receiving their services. </em>

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8 0
3 years ago
Longley Trucking is issuing a 20-year bond with a $2,000 face value tomorrow. The issue is to pay an 8% coupon rate, because tha
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Longly will receive $1,817.43 from selling the bond.

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