Duck Company Has Valued Its Inventories at FIFO Cost for the Past

question 45

Multiple Choice

Duck Company has valued its inventories at FIFO cost for the past 10 years.The
Company would like to change to the LIFO method,effective in 2017.

• A)The election to change can be made with the 2017 tax return and the beginning inventory for 2017 will be the same as the FIFO inventory at the end of 2016 and no § 481 adjustment is required.
• B)The beginning inventory value for 2017 must be computed as though the company had been using LIFO in all prior years and a § 481 adjustment is required.
• C)The taxpayer must apply in 2016 for permission to change methods effective in 2017.
• D)Duck must amend all prior years' tax returns to compute income by the LIFO method.
• E)None of the above.

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Definitions:

Twin Studies

Twin studies are research designs in psychology and genetics that compare the similarities and differences between monozygotic (identical) and dizygotic (fraternal) twins to understand the influence of genetics versus environment.

Genetic Component

A portion of an organism's traits or conditions influenced by genes inherited from its parents.

Cross-sectional Studies

Research methods that analyze data from a population, or a representative subset, at a specific point in time.

Hans Eysenck

A psychologist known for his work in the field of personality theory, emphasizing the genetic basis of personality and intelligence.