Another Problem Is That the Costs of Maintaining a Specific

question 219

Essay

Another problem is that the costs of maintaining a specific identification system may outweigh the benefits of using such a method. As mentioned in part a, financial statement and tax effects of using FIFO and LIFO are more beneficial to companies than simply being able to match the actual cost of a unit to its selling price.
-Your office is on the 68^th floor of your building. The CEO's office is on the 77^th floor. The two of you are waiting for an elevator one morning. The CEO states "Our prices are rising and I want the lowest net income for tax purposes and the highest ending inventory for external reporting purposes. Which inventory method should we use?
Requirement
You have three minutes to respond to the CEO. What is your response?

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Definitions:

Smoot-Hawley Tariff

A U.S. law enacted in 1930 that raised import tariffs on thousands of products, contributing to the severity of the Great Depression by restricting international trade.

Conservative

Pertains to a political and social philosophy that emphasizes tradition, established institutions, and prefers gradual development to abrupt change.

Reinhold Niebuhr

An American theologian, ethicist, and commentator on politics and public affairs, known for his influence on political thought, particularly regarding American and Christian realist philosophy.

Fordlandia

A failed industrial town and rubber plantation established by Henry Ford in the Brazilian Amazon during the 1920s, intended to secure a rubber supply for Ford Motor Company.