The following information is available for Leno Company: Sales ............... $695,000 Goods available for sale ........ $535,000

Question:

The following information is available for Leno Company:
Sales ............... $695,000
Goods available for sale ........ $535,000
(using FIFO) ...... $246,000
Leno Company currently uses the FIFO cost flow method for financial statement reporting and for tax reporting. It is considering changing to the LIFO cost flow method for tax reporting purposes. If Leno uses LIFO, its would be $175,000.

Required
a. Why would Leno want to change to LIFO for tax reporting?
b. Discuss any changes that Leno would have to make for reporting if it does change to LIFO for tax reporting.

Ending Inventory
The ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula Ending Inventory Formula =... GAAP
Generally Accepted Accounting Principles (GAAP) is the accounting standard adopted by the U.S. Securities and Exchange Commission (SEC). While the SEC previously stated that it intends to move from U.S. GAAP to the International Financial Reporting Standards (IFRS), the...