$6.$ What is LIFO reserve? Why is the adjustment of LIFO reserve to produce FIFO$-$based numbers necessary? $7.$ What is the cumulative effect of LIFO inventory accounting on Leggett & Platt$$s pre$-$tax income as of $2016$ year$-$end compared to FIFO accounting?

$8.$What is the cumulative dollar amount of the company$$s tax expense been affected by the use of LIFO inventory costing as of the year$-$end $2016,$ assuming the tax rate is $35\%?$

$9.$ What effect has the use of LIFO inventory costing had on the company$$s pre$-$tax income and tax expense for $2016$ only $($assume tax rate of $35\%)?$Other Assets

Goodwill

$791\mathrm{.}3$

$806\mathrm{.}1$

Other intangibles, less accumulated amortization of

$$137\mathrm{.}0$ and $$139\mathrm{.}8$ at December $31,2016$ and $2015,164\mathrm{.}9,188\mathrm{.}4$

respectively

Sundry

$137\mathrm{.}5$

$117\mathrm{.}2$

Total other assets

$1\mathrm{.}093\mathrm{.}7$

$1,111\mathrm{.}7$

Total assets

$$2,984\mathrm{.}1$

$$2,963\mathrm{.}7$

Calculate the common$-$size inventories for both years and comment on any differences that you note. Given that the

company is in the furniture manufacturing industry, does this ratio seem appropriate? What additional information you need to

make an informed judgement?

Compute inventory turnover for both years and interpret any change. At December $31,2014,$ Total inventories, net were

$$481\mathrm{.}4$ million.

Leggett & Platt uses LIFO for at least some of its inventory method. What would the company have reported as inventory in

$2016$ and $2015$ if the company had used the FIFO method? $($LIFO reserve balances: $$33\mathrm{.}8$ million in $2016$; $$22\mathrm{.}6$ million in

$2015$; and $$73\mathrm{.}0$ million in $2014.)$

Recalculate cost of goods sold $($COGS$)$ under the FIFO method.

Recompute the inventory turnover ratios for $2016$ and $2015$ under the FIFO method. What difference do you notice between

the FIFO$-$based ratios and the LIFO$-$based ratios?

What is LIFO reserve? Why is the adjustment of LIFO reserve to produce FIFO$-$based numbers necessary?

What is the cumulative effect of LIFO inventory accounting on Leggett & Platt's pre$-$tax income as of $2016$ year$-$end

compared to FIFO accounting?

What is the cumulative dollar amount of the company's tax expense been affected by the use of LIFO inventory costing as of

the year$-$end $2016,$ assuming the tax rate is $35\%?$

What effect has the use of LIFO inventory costing had on the company's pre$-$tax income and tax expense for $2016$ only

$($assume tax rate of $35\%)?($in millions$)$

Dec. $31,2016$ Dec. $31,2015$

Current Assets

Cash and cash equivalents

$$281\mathrm{.}9$

$$253\mathrm{.}2$

Trade receivables, net of allowance $$7\mathrm{.}2$ and $$9\mathrm{.}3,$ at

December $31,2016$ and $2015,$ respectively

$450\mathrm{.}8$

$448\mathrm{.}7$

Other receivables, net

Total receivables, net

Inventories

Finished goods

Work in process

Raw materials and supplies

LIFO reserve

Total inventories, net

Prepaid expenses and other current assets

Total current assets

Property, plant and equipment $-$ at cost

Machinery and equipment

Buildings and other

Land

Total property, plant and equipment

Less accumulated depreciation

Net property, plant and equipment

$255\mathrm{.}7$

$52\mathrm{.}6$

$245\mathrm{.}1$

$(33\mathrm{.}8)$

$519\mathrm{.}6$

$36\mathrm{.}8$

$1,324\mathrm{.}9$

$1,133\mathrm{.}8$

$559\mathrm{.}4$

$37\mathrm{.}7$

$1,730\mathrm{.}9$

$(1,165\mathrm{.}4)$

$565\mathrm{.}5$

$242\mathrm{.}8$

$42\mathrm{.}6$

$241\mathrm{.}8$

$(22\mathrm{.}6)$

$504\mathrm{.}6$

$33\mathrm{.}2$

$1,311\mathrm{.}2$