Question
Major Co.s 2020 net income was decreased by $14 million loss due to LIFO Liquidation. The ending balance of LIFO reserve was $8 billion for
Major Co.s 2020 net income was decreased by $14 million loss due to LIFO Liquidation. The ending balance of LIFO reserve was $8 billion for 2020 and $6.5 billion for 2019. The ending Inventory for 2019 was 8.3 billion. (Tax rate: 30%) (1 million =0.001 billion) (Except Q2, for Q1,3 and 4-ONLY enter numbers, for example, if the answer is 4.5 billion, then enter 4.5; for Q5-if the answer is 5.6%, then enter 5.6)
Q1 Please calculate the difference in Net Income if Major Co. would have used FIFO to report its Inventory? (in billions)
Q2 Whether FIFO net income would be greater or less than LIFO net income? (Fill either Greater/Less)
Q3 What would the ending balance of LIFO reserve have been on December 31, 2020 WITHOUT a LIFO Liquidation occurred in 2020? (Liquidated Inventory layer has higher cost) (in billions)
Q4 Please calculate the amount of Tax saving that Major Co. used LIFO instead of FIFO? (in billions)
Q5 Please determine the rate of change in input cost for Major Co.s Inventory in 2020? (%)
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