Company A uses the FIFO method to cost inventory and Company B uses the LIFO method. Thetwo companies are exactly alike except for the difference in inventory costing methods. Costs ofinventory items for both companies have been falling steadily in recent years and each companyhas increased its inventory each year. Ignore income tax effects.Required:Identify which company will report the higher amount for each of the following ratios. If it is notpossible to identify which will report the higher amount, explain why.1. Current ratio.2. Debt-to-assets ratio.3. Earnings per share.

Q: Data on Shin Inc. for 2008 are shown below, along with the inventory conversion period (ICP) of the…

A: Every business wants to decrease its inventory conversion period so that their business turn into…

Q: Sanborn Inc. is a new manufacturing company founded on February 2, 2012. The company had to choose…

A: FIFO: FIFO stands for First-In, First-Out.  In this method inventory purchased first will be sell…

Q: Hubble Space Incorporated has the following data which includes inventory conversion period or ICP…

A: Inventory conversion period is the number of days required to convert raw materials into finished…

Q: Chavez Wholesale Inc. changed its method of valuing inventory from the average cost method to the…

A: To generate a journal entry, you enter transaction records into your company's books. Your journal…

Q: Below is the net income of New Girl Instrument AG, a private company, computed under the two…

A: Weighted average method is a method of inventory valuation where unit cost of goods available is…

Q: If this were done, by how much would inventories decrease? Ass

A: Information Provided: Inventory = 20,000 COGS = 85,000 ICP (current) = 85.88 Benchmark ICP = 38

Q: Maxi Corporation uses the unit LIFO inventory method. The costs of the company’s products have been…

A: Definition: Dollar-value-LIFO: This method shows all the inventory figures at a dollar price rather…

Q: Assume that the company had switched from the average cost method to the FIFO method with net income…

A: If the company changed its method of inventory pricing from LIFO to FIFO, then the net income that…

Q: Inventory Year-End Costs Cost Index December 31, 2004 $438,000 1.05 December 31, 2005 460,000…

A: The right answer is option c. $368,400

Q: At the beginning of current year, Black Company changed the inventory cost flow method to FIFO from…

A: The increase in beginning inventory increases the cost of goods sold and increase in ending…

Q: A condensed income statement for Corolla Corporation and a partially completed vertical analysis are…

A: There are two type of analysis prepared by the management which are, (1) Vertical income analysis…

Q: For 2012, Macklin Inc. reported a significant decrease in net income. At the end of the year, John…

A: An income statement is a financial report that indicates the revenue and expenses of a business. It…

Q: Flay Foods has always used the FIFO inventory costing method for both financial reporting and tax…

A: 1. Prepare journal entry to record the change in value of inventory value.

Q: Below is the net income of New Girl Instrument AG, a private company, computed under the two…

A: Inventory valuation includes the methods by which the inventory is valued when it is purchased and…

Q: Wolfgang Kitchens has always used the FIFO inventory costing method for both financial reporting and…

A: 1.

Q: Below are several financial statement items for fiscal year 2013 for two grocery chains, Whole Foods…

A: Financial ratios are the measures that are used to estimate and determine the financial performance…

Q: Hunter, Inc. uses the LIFO method of inventory costing and is facing the possibility of a LIFO…

A: Concept : It occurs when a company using LIFO inventory valuation method sells more goods old stock…

Q: This is a continuation of problem 15. At December 31, Year 2, Beech Corporation still had the same…

A: Solution to Requirement (1) IFRS reports inventory on basis of lower of the cost or net realizable…

Q: Quality Manufacturers uses the LIFO cost flow assumption to value inventory. For the year 2009, it…

A: In the valuation of inventories, usually three kinds of methods are used namely the LIFO method,…

Q: Nu Company reported the following pretax data for its first year of operations. Net sales Cost of…

A: 1. For answering this question we are required to Prepare a Trading A/c.   2. Gross Profit=…

Q: Hubble Space Incorporated has the following data which includes inventory conversion period or ICP…

A: Inventory refers to the goods or items which are stored by the business either for selling or for…

Q: ABC Corporation sells just one product. At the end of fiscal year 2017, ABC applies the…

A: Writing down the value of inventory by $300 decreases the value of total assets by $300 and the…

Q: Goddard Company has used the FIFO method of inventory valuation since it began operations in 2013.…

A: Method of Inventory: Inventory refers to the current assets that a company expects to sell during…

Q: e ratio was always lower. Which of the following statements would be the best interpretation for the…

A: Inventory turnover ratio establishes the relationship between the cost of goods sold and the average…

Q: When should the loss be reported in the interim income statement?

A: The inventory management will include ordering of goods, storing/holding of goods, work in progress…

Q: At December 31, Year 2, Beech Corporation still had the same three different products in its…

A: Question is based on the concept of Accounting standards

Q: In 2022, Kimberly Corporation changed its method of inventory pricing from LIFO to FIFO. Net income…

A: Explanation: If the company changed its method of inventory pricing from LIFO to FIFO, then the net…

Q: Bulldogs Inc. has recently calculated the inventory turnover for the currently year to be 30. In…

A: Answer. The company took fewer days to sell its inventory in the current year than in prior years.…

Q: (Compute FIFO and Average-Cost—Periodic) The following information is related to radios for the…

A: Periodic inventory system: It involves the physical count of goods at specific interval of time.…

Q: The following statement is TRUE / FALSE (circle one). Under current U.S. GAAP, when a firm using…

A: Cost of goods sold is described as the amount or cost which is incurred by the business to…

Q: Kroger reported net earnings of $1,728 million in its fiscal year 2014 income statement. Assuming a…

A: Inventory valuation refers to a technique that is used to find out the value of the ending…

Q: Which of the following statements is correct? Group of answer choices A)When cost of goods sold as a…

A: Cost of goods sold is the total costs that is used to create a product or service, which has been…

Q: The management of Norton Corp. is considering the effects of various inventory-costing methods on…

A: The management of Norton Corp. is considering the effects of various inventory-costing methods on…

Q: The Cecil-Booker Vending Company changed its method of valuing inventory from the average cost…

A: 1.

Q: FIFO versus LIFO: Ratio Analysis. Presented below is financial data for two companies that are…

A: As posted multiple sub parts we are answering only first three sub parts kindly repost the…

Q: Bulldogs Inc. has recently calculated the inventory turnover for the currently year to be 30. In…

A: Inventory turnover measures how many times in a given period a company is able to replace the…

Q: The Jimenez Corporation’s forecasted 2011 financial statements follow, along with some industry…

A: The following balance sheet line items are taken from the records of Jimenez Corporation to evaluate…

Q: Mannisto Inc. uses the FIFO inventory cost flow assumption. In a year of rising costs and prices,…

A: LIFO Method is an inventory valuation method where inventory purchased last sold first. Whereas as…

Q: SLR Corporation has 1,000 units of each of its two products in its year-end inventory. Per unit data…

A: Net realizable value means the amount that could be received after deducted all incidental expenses…

Q: National Co. has the following information for the period: Profit margin before tax based on sales…

A: Contribution margin is the portion of sales revenue left after paying the variable costs. Therefore,…

Q: AAA Hardware uses the LIFO method to value its inventory. Inventory at the beginning of the year…

A: FIFO: Under this inventory method, the units that are purchased first, are sold first. Thus, it…

Q: effect of the LCNRV

A: Particulars Product 1 Product 2 Cost $54 $36 Selling price less Costs to sell $80 - $4 = $76 $38…

Q: Nueva Company reported the following pretax data for its first year of operations.           Net…

A: Cost of goods available for sale means total goods including opening stock and purchases which can…

Q: piotua incone as of year-end 2015? Explain. Assume GE has a 35% income tax rate. As of the 2015…

A: FIFO method computation has been shown as above.

Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.