The following information was taken directly from the annual report of a firm that wishes to remain anonymous. (The dates have been changed.)
a. The corporation indicates that earnings can be affected unrealistically by rapid increases and fluctuations in prices when using LIFO. Comment.
b. How much taxes will need to be paid on past earnings from the switch from LIFO? How will the switch from LIFO influence taxes in the future?
c. How will a switch from LIFO affect 2009 profits?
d. How will a switch from LIFO affect future profits?
e. How will a switch from LIFO affect 2009 cash flow?
f. How will a switch from LIFO affect future cash flow?
g. Speculate on the real reason that the corporation wishes to switch from LIFO.