If the choice of a cost flow assumption does not affect net income over the life of a business, how…


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If the choice of a cost flow assumption does not affect net income over the life of a business, how… 1 answer below » Inventory flow assumptions over several periods and income taxes Heller Bottling Company began business in 2008. Inventory units purchased and sold for the first year of operations and each of the following four years follow: Units Purchased Cost per Units Units Sold 2008 10,000 $12 5,000 2009 12,000 16 16,000 2010 5000 18 2,000 2011 10,000 21 10,000 2012 2000 23 6,000 Inadequate cash flows forced Heller Bottling Company to cease operations at the end of 2012. a. Compute cost of goods View complete question » Inventory flow assumptions over several periods and income taxes Heller Bottling Company began business in 2008. Inventory units purchased and sold for the first year of operations and each of the following four years follow: Units Purchased Cost per Units Units Sold 2008 10,000 $12 5,000 2009 12,000 16 16,000 2010 5000 18 2,000 2011 10,000 21 10,000 2012 2000 23 6,000 Inadequate cash flows forced Heller Bottling Company to cease operations at the end of 2012. a. Compute cost of goods sold for each of the five years if the company uses the following: (1) LIFO cost flow assumption (2) FIFO cost flow assumption (3) Averaging cost flow assumption b. Does the choice of a cost flow assumption affect total net income over the life of a business? Explain your answer. c. If the choice of a cost flow assumption does not affect net income over the life of a business, how does the choice of LIFO give rise to a tax benefit? View less » Jun 11 2014 04:06 PM

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