LO.6 Blue is a retailer that uses the FIFO inventory method. Blue has consistently taken its physical
Question:
LO.6 Blue is a retailer that uses the FIFO inventory method. Blue has consistently taken its physical inventory at the end of the day on the last day of its tax year, December 31.
This practice is very unpopular with its employees, who do not like working on New Year’s Eve. The company is considering taking the inventory at the end of November and adjusting for sales and purchases in the last month of the year. However, the CFO has raised the issue that by taking the inventory at the end of November, loss from theft and breakage in December will not be taken into account until the physical inventory is taken in the following year. Is the CFO’s concern valid? Explain.
Step by Step Answer:
South Western Federal Taxation 2013 Individual Income Taxes
ISBN: 9781133189558
36th Edition
Authors: William Hoffman, James E. Smith