Carmen Inc., producer of high-tech boating equipment, disclosed the following information in its 2013 annual report to shareholders:
Inventories are valued at the lower of cost or net realizable value with cost determined by the last-in, first-out (LIFO) method for inventories.
Inventories at May 31 were as follows: If the inventory had been valued using the first-in, first-out (FIFO) method, inventories would have been higher by $22,200 and $24,400 ($ in thousands) at the end of 2013 and 2012, respectively.
How does the supplemental LIFO information indicating what the value of ending inventory would have been if measured using FIFO improve the quality of financial reporting by Carmen?

Question

Carmen Inc., producer of high-tech boating equipment, disclosed the following information in its 2013 annual report to shareholders:
Inventories are valued at the lower of cost or net realizable value with cost determined by the last-in, first-out (LIFO) method for inventories.
Inventories at May 31 were as follows:  If the inventory had been valued using the first-in, first-out (FIFO) method, inventories would have been higher by $22,200 and $24,400 ($ in thousands) at the end of 2013 and 2012, respectively.
How does the supplemental LIFO information indicating what the value of ending inventory would have been if measured using FIFO improve the quality of financial reporting by Carmen?

Quizplus · Accepted Answer

The Answer of Carmen Inc., producer of high-tech boating equipment, disclosed the following information in its 2013 annual report to shareholders:
Inventories are valued at the lower of cost or net realizable value with cost determined by the last-in, first-out (LIFO) method for inventories.
Inventories at May 31 were as follows:  If the inventory had been valued using the first-in, first-out (FIFO) method, inventories would have been higher by $22,200 and $24,400 ($ in thousands) at the end of 2013 and 2012, respectively.
How does the supplemental LIFO information indicating what the value of ending inventory would have been if measured using FIFO improve the quality of financial reporting by Carmen?