Aiwa Inc Uses the Average-Cost Inventory Method

question 128

Multiple Choice

Aiwa Inc. uses the average-cost inventory method. In 2014, the company reported net income of ¥59,600,000. Had average-cost been used, the company would have reported net income of ¥58,900,000. Assuming a 25% tax rate, what is the impact of the inventory cost flow assumption on Aiwa's taxes for 2014?

• A) Aiwa would pay ¥175,000 less in taxes for 2014 as a result of using the average-cost inventory method rather than FIFO.
• B) Aiwa would pay ¥525,000 less in taxes for 2014 as a result of using the average-cost inventory method rather than FIFO.
• C) The inventory method does not impact the amount of income tax paid.
• D) Not determinable without income before taxes.

---

Definitions:

Catfishing

The practice of creating a fake identity on a social networking platform, often with deceptive intentions.

Customer Reviews

Feedback provided by customers regarding their experiences with a product or service, often used by others to gauge quality and make purchasing decisions.

Software Piracy

The unauthorized copying, distribution, or use of copyrighted software.

Digital Footprint

The record of an individual's or entity's online activities, including websites visited, emails sent, and social media presence.