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:

Possession

The act of having or controlling something, either physically or legally.

Covenant of Quiet Enjoyment

A lease provision assuring the tenant a right to freely and quietly use the leased premises without disturbance by claims of superior title.

Lessee

A person or entity that leases or rents property or equipment from another, the lessor, under the terms of a lease agreement.

Lessee

An individual or entity that leases property or equipment from another party, the lessor.