The Following Note Appeared in the 2014 Annual Report of Edison

question 80

Essay

The following note appeared in the 2014 annual report of Edison Company:
Inventories

Inventories valued at LIFO comprised approximately 44% and 42% of inventories at December 31,2014 and 2013,respectively.
Required:
1.What basis do you believe Edison uses to account for its inventories internally?
2.Express your opinion as to why Edison reduces its inventories to LIFO cost.
3.If Edison did not adjust its inventories to LIFO cost,what would be the impact on Edison's
a.Net income before tax for 2013?
b.Retained earnings as of January 1,2014 (assuming a 34% tax rate)? Edison's reduction to LIFO cost in 2014 was $19.1 million.

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Definitions:

Impaired People

Are considered deficient in physical or mental capacity.

Age Cohort

A group of individuals who share a common age characteristic, typically used in sociological and demographic analyses to examine similarities and differences within and across populations.

Ageism

Prejudice or discrimination against individuals or groups based on their age.

Age Roles

Socially defined expectations and behaviors considered appropriate for individuals or groups based on their age.