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Part 2-Inventory IEM industries, Inc. and Subsidiaries accounting policy for inventories is as follows: E. INVENTORY VALUATION Inventories are stated at the lower of cost

Part 2-Inventory IEM industries, Inc. and Subsidiaries accounting policy for inventories is as follows: E. INVENTORY VALUATION Inventories are stated at the lower of cost or market. For a portion of the Company's inventory, cost is determined using the last-in, first-out ("LIFO") method. For approximately 36% and 47% of the Company's inventories at September 30, 2013 and 2012, respectively, the LIFO method is used to value the Company's inventories. The first-in, first-out ("FIFO") method is used to value the remainder of the Company's inventories. LIFO reserve was $7,977 and $9,537 in fiscal 2013 and 2012, respectively. During fiscal 2013, a reduction in total inventory resulted in a liquidation of LIFO inventory quantities valued at the lower costs of prior years. The LIFO liquidation decreased the cost of goods sold in fiscal 2013 by approximately $1,300. Below is a footnote extracted from their 2013 10-K filing (in thousands): 2. Inventories Inventories at September 30 consist of: Raw materials and supplies Work-in-process.. Finished goods. Total inventories. 370 S 2013 5,906 $ 7,049 5,385 18,340 S 2012 3,662 8,861 4,064 16,587
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Part 2-Inventory IEM industries, Inc, and Subsidiaries accounting policy for inventories is as follows: E. INVENTORY VALUATION Inventories are stated at the lower of cost or market. For a portion of the Company's inventory, cost is determined using the last-in, first-out ("LIFO") method. For approximately 36% and 47% of the Company's inventories at September 30, 2013 and 2012, respectively, the LIFO method is used to value the Company's inventories. The first-in, first-out ("FIFO") method is used to value the remainder of the Company's inventories. LIFO reserve was $7,977 and $9,537 in fiscal 2013 and 2012, respectively. During fiscal 2013, a reduction in total inventory resulted in a liquidation of LIFO inventory quantities valued at the lower costs of prior years. The LIFO liquidation decreased the cost of goods sold in fiscal 2013 by approximately $1,300. Below is a footnote extracted from their 201310K filing (in thousands): Consolidated Statements of Operations (Amouats in thousands, except per share data) Answer the questions on the next page using the information provided. 1- (2 points) What inventory cost flow assumption(s) does IEM use to compute the cost of its inventories? 2- (6 points) As of September 30, 2013: a. What is the reported book value of inventory? b. What is the book value of inventory if the firm had used FIFO? c. What is the cost of goods sold if the firm had used FIFO? 3- (6 points) Assuming a federal tax rate of 35%, did IEM pay more or less taxes in 2013 compared to what it would have paid if they had not used LIFO as a cost flow assumption for some of their inventories? By how much

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