P7-34.Stat eBook Print Question 1 Partially correct Mark 1.00 out of 6.00 P Flag question Analyzing Inventory Disclosure Comparing LIFO and FIFO The current asset section of the 2017 and 2016 fiscal year end balance sheets of The Kroger Co. are presented in the accompanying table: February 3, January 28, $ millions 2018 2017 Current assets Cash and temporary cash investments $347 $322 Deposits in-transit 1,161 910 Receivables 1,637 1,649 FIFO inventory 7,781 7,852 LIFO reserve (1,248) (1,291) Assets held for sale 604 Prepaid and other current assets 835 898 Total current assets $11,117 $10,340 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 93% of inventories in 2017 and 89% of inventories in 2016 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 $1,248 million at February 3, 2018 and $1,291 million at January 28, 2017. We follow the Link-Chain, Dollar-Value LIFO method for purposes of calculating our LIFO charge or credit. Required: a. At what dollar amount does Kroger report its inventory in its February 3, 2018, balance sheet? $ 6,533 million b. What is the cumulative effect (through February 3, 2018) of the use of LIFO on Kroger's pretax earnings? (Show an increase as a positive number and a decrease as a negative number.) * million C. Assuming a 25% tax rate, what is the cumulative (through February 3, 2018) 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.) x million d. Kroger reported net earnings of $1,907 million in its fiscal year 2017 income statement. Assuming a 25% 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.) * million e. Kroger reported merchandise costs (cost of goods sold) of $95,662 million in fiscal year 2017. Compute its inventory turnover for the year. (Round your answers to one decimal place.) f. Calculate the inventory turnover ratio if the FIFO costing method had been used. (Round your answers to one decimal place.) Check P7-34.Stat eBook Print Question 1 Partially correct Mark 1.00 out of 6.00 P Flag question Analyzing Inventory Disclosure Comparing LIFO and FIFO The current asset section of the 2017 and 2016 fiscal year end balance sheets of The Kroger Co. are presented in the accompanying table: February 3, January 28, $ millions 2018 2017 Current assets Cash and temporary cash investments $347 $322 Deposits in-transit 1,161 910 Receivables 1,637 1,649 FIFO inventory 7,781 7,852 LIFO reserve (1,248) (1,291) Assets held for sale 604 Prepaid and other current assets 835 898 Total current assets $11,117 $10,340 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 93% of inventories in 2017 and 89% of inventories in 2016 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 $1,248 million at February 3, 2018 and $1,291 million at January 28, 2017. We follow the Link-Chain, Dollar-Value LIFO method for purposes of calculating our LIFO charge or credit. Required: a. At what dollar amount does Kroger report its inventory in its February 3, 2018, balance sheet? $ 6,533 million b. What is the cumulative effect (through February 3, 2018) of the use of LIFO on Kroger's pretax earnings? (Show an increase as a positive number and a decrease as a negative number.) * million C. Assuming a 25% tax rate, what is the cumulative (through February 3, 2018) 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.) x million d. Kroger reported net earnings of $1,907 million in its fiscal year 2017 income statement. Assuming a 25% 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.) * million e. Kroger reported merchandise costs (cost of goods sold) of $95,662 million in fiscal year 2017. Compute its inventory turnover for the year. (Round your answers to one decimal place.) f. Calculate the inventory turnover ratio if the FIFO costing method had been used. (Round your answers to one decimal place.) Check