Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Hi, please help me with answering part d, and give the detailed calculations. Thank you in advance for your help! Analyzing Inventory Disclosure Comparing LIFO

Hi, please help me with answering part d, and give the detailed calculations. Thank you in advance for your help!image text in transcribed

Analyzing Inventory Disclosure Comparing LIFO and FIFO The current asset section of the 2014 and 2013 fiscal year end balance sheets of The Kroger Co. are presented in the accompanying table: January 31, February 1 millions 2015 2014 Current assets $825 Cash and temporary cash investments Deposits in-transit Receivables $188 786 949 6,297 1,083) 288 $7,425 845 5,793 (827) 319 $7,621 FIFO inventory LIFO credit Prepaid and other current assets Total current assets In addition, Kroger provides the following footnote describing its inventory accounting policy (assume the following is their complete disclosure): Inventories are stated at the lower of cost principally on a LIFO basis or market. In total, approximately 95% of inventories in 2014 and 2013 were valued using the LIFO method. Cost for the balance of the inventories, including substantially all fuel inventories, was determined using the FIFO method. Replacement cost was higher than the carrying amount by $1,043 milion at January 31, 2015 and $827 million at February 1, 2014. We follow the Link-Chain, Dollar-Value LIFO nethod for purposes of calculating our LIFO charge or credit. Required a. At what dollar amount does Kroger report its inventory in its January 31, 2015, balance sheet? $5,214 million b. What is the cumulative effect (through January 31, 2015) of the use of LIFO on Kroger's pretax earnings? (Show an increase as a positive number and a decrease as a negative number.) $(1,083) million Assuming a 35% tax rate, what is the cumulative (through January 31, 2015) tax effect of the use of LIFO to determine inventory costs? (Show an increase as a positive number and a decrease as a negative number.) (Round your answers to one decimal place.) (379.1) d Kroger reported net earnings of $602 million in its fiscal year 2014 income statement. Assuming a 35% tax rate, what amount of net earnings would Kroger report if the company used the FIFO inventory costing method? Round your answers to one decimal place.) $691.6 x million

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing Cases An Interactive Learning Approach

Authors: Mark S. Beasley, Frank A. Buckless, Steven M. Glover, Douglas F. Prawitt

3rd Edition

0131494910, 9780131494916

More Books

Students also viewed these Accounting questions