Evaluation of Inventory Costing Methods Users of financial statements rely on the information available to them to decide whether to invest in a company or lend it money. As an investor, you are comparing three companies in the same industry. The cost to purchase inventory is rising in the industry. Assume that all expenses incurred by the three companies are the same except for cost of goods sold. The companies use the following methods to value ending inventory: Company A-weighted average cost Company B-first-in, first-out (FIFO) Company C-last-in, first-out (LIFO) Required: 1. Which of the three companies will report the highest net income? Company B 2. Which of the three companies will pay the least in income taxes? Company C 3. When inventory prices are rising, which method of inventory costing is superior when an investor is evaluating financial statements? LIFO, because it matches current prices with current revenue. 40). When inventory prices are falling which company will report highest net income? 4ii). When inventory prices are falling, which company will pay the least amount in income taxes? 4(iii). When inventory prices are falling, which method of inventory costing is superior when an investor is evaluating financial statements