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ABC Company has opted to employ the LIFO mechanism for inventory valuation. According to the figures released for the fiscal year ending December 31, 2023,
ABC Company has opted to employ the LIFO mechanism for inventory valuation. According to the figures released for the fiscal year ending December 31, 2023, they began with 800 units, each valued at $15. Additional purchases were made on February 1 (1,500 units at $17 each) and June 1 (2,000 units at $19 each). A total of 3,000 units were sold during the year, leaving 1,300 units in the ending inventory.
- Compute the cost of goods sold (COGS) using the LIFO method for ABC Company.
- Determine the value of ending inventory using the LIFO method.
- Discuss the implications of ABC Company's use of LIFO on its income tax liability.
- Analyze how ABC Company’s financial statements differ when comparing LIFO to FIFO.
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