For each statement, indicate whether the statement is True (T) or False (F). 1 mark for each statement.

6. In a period of rising prices, a company will have reduced cash flow if switching its inventory costing method from First-In, First-Out (FIFO) to Last-In, First-Out (LIFO). Assume the company starts to use LIFO for tax reporting following the inventory costing method switch.

7. One difference between straight-line and double-declining-balance depreciation methods is that income taxes paid will be lower under the double-declining-balance method. Assume the company has always been using the straight-line depreciation method for tax reporting.

8.Dow Chemical Corporation plans to build a laboratory dedicated to a special project. The company will not use the laboratory after the project is finished. Under U.S. GAAP, this laboratory should be capitalised and depreciated.

9. During the fiscal year 2016, the U.S. dollar strengthened relative to the other principal currencies in which Leahy Enterprises transacted business except for the Indian rupee. The net profit of an Indian subsidiary of Leahy Enterprises would be higher when translated back to the U.S. dollar.

10.

Costco Wholesale Corporation collects annual non-refundable membership fees from customers. Costco should recognise these membership fees as revenue immediately when cash is received because the fees are nonrefundable.