In interim reporting, a LIFO liquidation requires the company to forecast the year-end
A)cost of goods sold
B)ending inventory
C)LIFO reserve
D)tax liability

Question

Quizplus · Accepted Answer

In LIFO liquidation, old inventory layers are sold out, resulting in lower inventory levels and higher cost of goods sold. In interim reporting, the company must estimate the year-end inventory balance, which is needed to determine the impact of the LIFO liquidation on the cost of goods sold for the interim period. Therefore, the company needs to forecast the ending inventory balance.

In Interim Reporting, a LIFO Liquidation Requires the Company to Forecast