Why do relatively stable inventory costs across periods reduce the importance of management's choice 06-. of an inventory costing method? 06-2. 06-3. Explain why using the FIFO inventory costing method will increase gross profit during periods of rising inventory costs If inventory costs are rising, which inventory costing method-first-in, first-out; last-in, first-out; or average cost-yields the (a) lowest ending inventory? (b) lowest net income? (c) largest ending inven- , ry? (d) largest net income? (e) greatest cash flow, assuming the same method is used for tax purposes? Even though it may not reflect their physical flow of goods, why might companies adopt last-in, first out inventory costing in periods when costs are consistently rising? In a recent annual report, Kaiser Aluminum Corporation made the following statement in reference to its inventories: "The Company recorded pretax charges of approximately $19.4 million because of CORPO a reduction in the carrying values of its inventories caused principally by prevailing lower pri lumina, primary aluminum, and fabricated products." What basic accounting principle cau Aluminum to record this $19.4 million pretax charge? Briefly describe the rationale for this principle. 06-4. KAI ALUM (KJ 0 6-6. What does the cash conversion cycle measure? 06-7. How might a company revise its depreciation expense computation due to a change in an asset's esti- 68, what is the benefit of accelerted depreciation for income tax purposes when the total depreciation 06-9. mated useful life or salvage value? Q6-10 06-11 06-12. taken over the asset's life is identical under any method of depreciation? What factors determine the gain or loss on the sale of a PPE asset? What is a LIFO reserve? What information can we learn from the LIFO reserve and from the change in the reserve during the year? Explain the concept of lower of cost or market. What benefit does the LCM rule create for financial statement users? Identify the three typical categories of restructuring costs and their effects on the balance sheet and the income statement