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

question 103

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 2015.

• A)The election to change can be made with the 2015 tax return and the beginning inventory for 2015 will be the same as the FIFO inventory at the end of 2014 and no § 481 adjustment is required.
• B)The beginning inventory value for 2015 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 2014 for permission to change methods effective in 2015.
• D)Duck must amend all prior years' tax returns to compute income by the LIFO method.
• E)None of these.

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Definitions:

Increased Significantly

A term used to describe a situation where a change or difference is both statistical and meaningful in magnitude, indicating a departure from chance.

Significantly Reduced

A phrase typically used in research to indicate a notable decrease in the magnitude or quantity of a measured variable.

Not Affected

Remaining unchanged or undisturbed by external influences or events.

Deindividuation

A psychological state where an individual loses their self-awareness and sense of individuality, often leading to disinhibited and impulsive behavior, usually in group settings.