Which of the following steps are required to adjust LIFO to FIFO?
A) Inventory needs to be calculated as reported LIFO inventory plus LIFO reserve.
B) Increase deferred tax payable by LIFO reserve times Tax rate.
C) Retained earnings need to be calculated as reported retained earnings plus LIFO reserve times (1 - Tax rate).
D) All of the above.

Question

Quizplus · Accepted Answer

All three steps are required to adjust LIFO to FIFO. Step A is necessary to determine the actual inventory value under FIFO. Step B is required to account for the higher tax liability that would arise due to the adjustment. Step C is necessary to adjust the retained earnings account, as LIFO reserve represents the difference between the reported LIFO inventory value and what it would be under FIFO.

Which of the Following Steps Are Required to Adjust LIFO