CMN Inc. uses LIFO and has experienced increasing costs since its founding. CMN disclosed that the LIFO reserve (also known as the LIFO allowance) at the end of 2018 was $3 million. The balance sheet showed ending inventory of $17 million at the end of 2018. What would the ending inventory have been if CMN had always used FIFO?
A) $20 million.
B) $17 million.
C) $14 million.
D) None of these answer choices are correct.

Question

Quizplus · Accepted Answer

LIFO reserve is usually added to LIFO ending inventory balance to arrive at FIFO ending balance. So, $17 + 3 = $20 million.

CMN Inc Uses LIFO and Has Experienced Increasing Costs Since Its