Supplement A Analyzing LIFO and FIFO When Inventory Quantities Decline
Based on an Actual Note In a recent annual report, General Electric reported the following in its inventory note:

It also reported a $23 million change in cost of goods sold due to €œlower inventory levels.€
Required:
1. Compute the increase or decrease in the pretax operating profit (loss) that would have been reported for the current year had GE employed FIFO accounting for all inventory for both years.
2. Compute the increase or decrease in pretax operating profit that would have been reported had GE employed LIFO but not reduced inventory quantities during the currentyear.

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December 31 (dollars in millions) Current Year Prior Year Raw materials and work in progress Finished goods Unbilled shipments $5,603 2,863 $5,515 2,546 280 246 8,712 (2,226) 8,341 (2,076) Less revaluation to LIFO LIFO value of inventories $6,486 $6,265