The Deere case compares the inventory reports and turnover ratios of two competitors: Deere & Company, which is headquartered in the U.S., and CNH Global N.V., which is headquartered in the Netherlands. Deere prepares its financials in accordance with U.S. GAAP and chooses the LIFO cost-flow method for a large portion of its inventory. CNH Global files form 20-F with the SEC (the report for foreign registrants) and includes U.S. GAAP financial statements. However, the company reports domestically in the Netherlands under International Financial Reporting Standards (IFRS) that do not allow the LIFO method for inventory.

In a period of generally rising prices, what is the effect of using LIFO vs FIFO on:

The inventory carrying value

New Income

How does the use of LIFO contribute to earnings management.