9

when comparing a US company that uses the last in, first out (LIFO) method of inventory with companies that prepares

their financial statementsunder international financial reporting standards (IFRS), analyst shoulld be aware that according to IFRS, the

LIFO method of inventory:

A. Never Acceptable

B. is always acceptable

C. Is acceptable when applied to finished goods inventory only

10

Analyst is evaluating the balance sheet of US company that uses last in, first out (LIFO) accounting for inventory. The analyst collects the following data

31-Dec-05

31-Dec-06

inventory reporte on balance sheet

$500,000

$600,000

LIFO reserve

$50,000

$70,000

Average tax rate

30%

30%

After adjusting the amount to convert to the first in, first (FIFO) method, inventory at 31 december 2006 would be closest to:

A.$600,000

B. $620,000

C. $670,000