E6-26. Analyzing an Inventory Footnote Disclosure The inventory footnote from Deere & Company's 2015 10-K follows. Inventories Most inventories owned by Deere & Company and its U.S. equipment subsidiae ies are valued at cost, on the last-in, first-out" LIFO) basis. Remaining inventories are genee ally valued at the lower of cost, on the "first-in, first-out" (FIFO basis, or market. The values gross inventories on the LIFO basis represented 66 percent and 65 percent of worldwide grom inventories at FIFO value at October 31, 2015 and 2014, respectively. If all inventories had bee valued on a FIFO basis, estimated inventories by major classification at October 31 in million of dollars would have been as follows: $ millions 2015 2014 Raw materials and supplies.... Work-in-process. Finished goods and parts. Total FIFO value Less adjustment to LIFO value.... Inventories $1,559 $1,724 450 654 3,234 3,360 5,243 5,738 1,426 1,528 $3,817 $4,210 This footnote reveals that not all of Deere's inventories are reported using the same inventory costing method (companies can use different inventory costing methods for different inventory pools) a. What amount does Deere report for inventories on its 2015 balance sheet? b. What would Deere have reported as inventories on its 2015 balance sheet had the company used FIFO inventory costing for all of its inventories? c. What cumulative effect has the use of LIFO inventory costing had, as of year-end 2015. on Deere's pretax income compared with the pretax income it would have reported had it used FIFO inventory costing for all of its inventories? Explain. d. Assuming a 35% income tax rate, by what cumulative dollar amount has Deere's tax expense been affected by use of LIFO inventory costing as of year-end 2015? Has the use of LIFO inventory cost- ing increased or decreased Deere's cumulative tax expense? e. What effect has the use of LIFO inventory costing had on Deere's pretax income and tax expense for 2015 only (assume a 35% income tax rate)