Principles of Accounting
12th Edition
ISBN: 9781133626985
Author: Belverd E. Needles, Marian Powers, Susan V. Crosson
Publisher: Cengage Learning
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Textbook Question
Chapter 7, Problem 3C
ExxonMobil Corporation had net income of $41.0 billion in 2011. Inventories under the LIFO method used by the company were $11.7 billion in 2011. Inventory would have been $25.6 billion higher if the company had used FIFO.11 Why do you suppose ExxonMobil’s management chooses to use the LIFO inventory method? On what economic conditions, if any, do those reasons depend?
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Hubble Space Incorporated has the following data which includes inventory conversion period or ICP of the firms against which it benchmarks. The firm's new manager is looking into the company on how he could reduce its inventory enough to reduce its ICP to the benchmarks’ average. If this were done, by how much would inventories decrease? Assume a 365-day year. Cost of goods sold =P85,000; Inventory =P20,000; Inventory conversion period (ICP) =85.88; Benchmark inventory conversion period (ICP) =38.00 *
Hubble Space Incorporated has the following data which includes inventory conversion period or ICP of the firms against which it benchmarks. The firm's new manager is looking into the company on how he could reduce its inventory enough to reduce its ICP to the benchmarks’ average. If this were done, by how much would inventories decrease? Assume a 365-day year. Cost of goods sold =P85,000; Inventory =P20,000; Inventory conversion period (ICP) =85.88; Benchmark inventory conversion period (ICP) =38.00 *
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Chapter 7 Solutions
Principles of Accounting
Ch. 7 - Prob. 1DQCh. 7 - Which of the following methods do not require a...Ch. 7 - Prob. 3DQCh. 7 - Prob. 4DQCh. 7 - Prob. 5DQCh. 7 - Prob. 6DQCh. 7 - Prob. 7DQCh. 7 - Prob. 1SECh. 7 - Assume the following data with regard to inventory...Ch. 7 - Prob. 3SE
Ch. 7 - Prob. 4SECh. 7 - Prob. 5SECh. 7 - Prob. 6SECh. 7 - Prob. 7SECh. 7 - Prob. 8SECh. 7 - Prob. 9SECh. 7 - Prob. 10SECh. 7 - Prob. 11SECh. 7 - Prob. 12SECh. 7 - Prob. 1EACh. 7 - Prob. 2EACh. 7 - Prob. 3EACh. 7 - Prob. 4EACh. 7 - Prob. 5EACh. 7 - Prob. 6EACh. 7 - During July 2014, Micanopy, Inc., sold 500 units...Ch. 7 - Prob. 8EACh. 7 - Prob. 9EACh. 7 - Prob. 10EACh. 7 - Prob. 11EACh. 7 - Prob. 12EACh. 7 - Midori Company merchandises a single product...Ch. 7 - The inventory of Wood4Fun and data on purchases...Ch. 7 - Prob. 3PCh. 7 - Prob. 4PCh. 7 - Prob. 5PCh. 7 - Prob. 6APCh. 7 - DiPaolos inventory, purchases, and sales for March...Ch. 7 - Prob. 8APCh. 7 - Prob. 9APCh. 7 - Zubac Company is a large retail furniture company...Ch. 7 - Prob. 1CCh. 7 - Prob. 2CCh. 7 - ExxonMobil Corporation had net income of 41.0...Ch. 7 - Prob. 4CCh. 7 - JCPenney, a large retail company with many stores,...
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- Acme Enterprises, a hypothetical company, manufactures computers and prepares itsfinancial statements in accordance with IFRS. In 2008, the cost of ending inventory was€5.2 million but its net realizable value was €4.9 million. Th e current replacement costof the inventory is €4.7 million. Th is figure exceeds the net realizable value less a normalprofit margin. In 2009, the net realizable value of Acme’s inventory was €0.5 milliongreater than the carrying amount.1. What was the eff ect of the write-down on Acme’s 2008 financial statements? Whatwas the eff ect of the recovery on Acme’s 2009 financial statements?2. Under U.S. GAAP, what would be the eff ects of the write-down on Acme’s 2008financial statements and of the recovery on Acme’s 2009 financial statements?3. What would be the eff ect of the recovery on Acme’s 2009 financial statements ifAcme’s inventory were agricultural products instead of computers?arrow_forwardMannisto Inc. uses the FIFO inventory cost flow assumption. In a year of rising costs and prices, the firm reported net income of $224,988 and average assets of $1,558,950. If Mannisto had used the LIFO cost flow assumption in the same year, its cost of goods sold would have been $43,570 more than under FIFO, and its average assets would have been $42,390 less than under FIFO. Required: a. Calculate the firm's ROI under each cost flow assumption (FIFO and LIFO). (Enter your answers as percentages rounded to 1 decimal place (i.e., 12.2%).) b. Suppose that two years later costs and prices were falling. Under FIFO, net income and average assets were $268,168 and $1,893,070, respectively. If LIFO had been used through the years, inventory values would have been $41,250 less than under FIFO, and current year cost of goods sold would have been $15,419 less than under FIFO. Calculate the firm's ROI under each cost flow assumption (FIFO and LIFO). (Enter your answers as percentages…arrow_forwardThe management of Norton Corp. is considering the effects of various inventory-costing methods on its financial statements and its income tax expense. Assuming that the price the company pays for inventory is increasing, which method will: (a) provide the highest net income? (b) result in the most stable earnings over a number of years? (c) result in the lowest income tax expense? (d) provide the highest ending inventory?arrow_forward
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