Duck Company has valued its inventories at FIFO cost for the past 10 years.The company would like to change to the LIFO method,effective in 2015.
A)The election to change can be made with the 2015 tax return and the beginning inventory for 2015 will be the same as the FIFO inventory at the end of 2014 and no § 481 adjustment is required.
B)The beginning inventory value for 2015 must be computed as though the company had been using LIFO in all prior years and a § 481 adjustment is required.
C)The taxpayer must apply in 2014 for permission to change methods effective in 2015.
D)Duck must amend all prior years' tax returns to compute income by the LIFO method.
E)None of these.

Question

Quizplus · Accepted Answer

Unlike other changes in accounting methods,the change from FIFO to LIFO can be made when the tax return is filed.Therefore c.is incorrect.The beginning inventory for the year of change is unaffected.Therefore,b.is incorrect.There is no requirement that any prior years' returns be amended (answer d. ).

Duck Company Has Valued Its Inventories at FIFO Cost for the Past