The following note appeared in the 2014 annual report of Edison Company:
Inventories

Inventories valued at LIFO comprised approximately 44% and 42% of inventories at December 31,2014 and 2013,respectively.
Required:
1.What basis do you believe Edison uses to account for its inventories internally?
2.Express your opinion as to why Edison reduces its inventories to LIFO cost.
3.If Edison did not adjust its inventories to LIFO cost,what would be the impact on Edison's
a.Net income before tax for 2013?
b.Retained earnings as of January 1,2014 (assuming a 34% tax rate)? Edison's reduction to LIFO cost in 2014 was $19.1 million.

Question

The following note appeared in the 2014 annual report of Edison Company:
Inventories
  
Inventories valued at LIFO comprised approximately 44% and 42% of inventories at December 31,2014 and 2013,respectively.
Required:
1.What basis do you believe Edison uses to account for its inventories internally?
2.Express your opinion as to why Edison reduces its inventories to LIFO cost.
3.If Edison did not adjust its inventories to LIFO cost,what would be the impact on Edison's
a.Net income before tax for 2013?
b.Retained earnings as of January 1,2014 (assuming a 34% tax rate)? Edison's reduction to LIFO cost in 2014 was $19.1 million.

Quizplus · Accepted Answer

The Answer of The following note appeared in the 2014 annual report of Edison Company:
Inventories
  
Inventories valued at LIFO comprised approximately 44% and 42% of inventories at December 31,2014 and 2013,respectively.
Required:
1.What basis do you believe Edison uses to account for its inventories internally?
2.Express your opinion as to why Edison reduces its inventories to LIFO cost.
3.If Edison did not adjust its inventories to LIFO cost,what would be the impact on Edison's
a.Net income before tax for 2013?
b.Retained earnings as of January 1,2014 (assuming a 34% tax rate)? Edison's reduction to LIFO cost in 2014 was $19.1 million.

The Following Note Appeared in the 2014 Annual Report of Edison