Aiwa IncUses the Average-Cost Inventory Method

question 102

Multiple Choice

Aiwa Inc.uses the average-cost inventory method.Its 2011, the company reported net income of ¥59,800,000.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 2011?

• A)Aiwa would pay ¥225,000 less in taxes for 2011 as a result of using the average-cost inventory method rather than FIFO.
• B)Aiwa would pay ¥675,000 less in taxes for 2011 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:

Charter of Rights and Freedoms

An essential legal charter in Canada assuring its citizens of foundational freedoms and rights.

Royal Assent

The final approval of the representative of the British Crown by which a bill becomes law in Canada.

Human Rights Legislation

Laws and regulations designed to protect individuals from discrimination and ensure equal opportunities for all, regardless of race, religion, gender, or other characteristics.

Discrimination

Unfair or prejudicial treatment of individuals based on certain characteristics such as race, age, or gender.