Analyzing an Inventory Footnote Disclosure General Electric Company reports the following footnote in its 10-K report. The company reports its inventories using the LIFO inventory costing method.

December 31 ($ millions) 2015 2014 Raw materials and work in process . . . . . $13,415 $ 9,963 Finished goods. . . . . . . . . . . . . . . . . . . . . 8,199 6,982 Unbilled shipments. . . . . . . . . . . . . . . . . . 628 755 22,243 17,701 Less revaluation to LIFO. . . . . . . . . . . . . . 206 (62)

$22,449 $17,639

a. What is the balance in inventories reported on GE’s 2015 balance sheet?

b. What would GE’s 2015 balance sheet have reported for inventories had the company used FIFO inventory costing?

c. What cumulative effect has GE’s choice of LIFO over FIFO had on its pretax income as of year-end 2015? Explain.

d. Assume GE has a 35% income tax rate. As of the 2015 year-end, how much has GE saved in taxes by choosing LIFO over FIFO method for costing inventory? Has the use of LIFO increased or decreased GE’s cumulative taxes paid?

e. What effect has the use of LIFO inventory costing had on GE’s pretax income and tax expense for 2015 only (assume a 35% income tax rate)?