Analyzing an inventory Footnote Disclosure General Electric Company reports the following footnote in its 10K report December 3 (in millions 2005 2004 Raw materials and work in process 55.9755042 Tinished goods 15.152 4806 United Shipments 333 102 11.012 10,250 Loss revocion to LIRO 1997 601) 3103155 The company reports its inventories using the lito inventory costing method ta) What is the balance in inventaries teported on GE 2005 balance sheet? milion) by What would Ges 2005 balance sheet have reported for inventories tad the company used FIFO inventory costirut? million c) What cumulative atfect has Ge's choice of LFO over fifo had on es preta come as of year end 20053 The cumulative effect is that pretax income has decreased. UFO matches more current inventory costs against current selling prices, thus avoiding the recognition of holdiniams The cumulative effect is that pretax income has not changed. LIFO and FIFO are simply two different ways to account for inventaries. Both methods lead to the same pretax income The cumulative effect on pretax income is nonexistent. The UFO and FIFO methods of inventory accounting cause only cash flow effects, and they do not affect relax income The cumulative effect is that pretax income has increased FIFO matches more current inventory costs against current selling prices, thus avoiding the recognition of holding Team 27 28 (c) Assume Ge has a 350 income tax rates of the 2005 year and how much has Gewed in taxes by choose LIFO over RO method for cost inwentary Round your answer to the (a) Assume GE has a 35% income tax rate. As of the 2005 year-end how much as GE saved in awes by choosinyt LIFO over fifo method for costing inwentary Round your answer to the nearest whole number) million leWhat elfect has the use of LIFO inventory costing had on Ge's pretax income and tax expense for 2005 only assume a 35% income tax rate? 2005 pretax income 3 by million 2005 tax expense .by mon Next Previous Save Answers Team