In the Case of a Change from the Lower-Of-Cost-Or-Market FIFO

question 40

Multiple Choice

In the case of a change from the lower-of-cost-or-market FIFO to the LIFO inventory method:

• A) The taxpayer may make the change when the tax return is filed without seeking the IRS's permission for the change.
• B) The taxpayer must revalue the beginning inventory from lower-of-cost-or-market to actual FIFO cost.
• C) The adjustment due to the change in accounting method must be spread over 3 years, the year of change and the two subsequent years.
• D) All of the above.
• E) None of the above.

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Definitions:

Proprietary Income

Income generated from the ownership of proprietary technology, information, or processes that gives a firm a competitive advantage.

Government-sponsored Businesses

Enterprises that are initiated and sometimes funded by the government but are operated under private ownership or public-private partnership.

Public Utilities

Essential services provided by both government and private sectors including water, electricity, and transportation.

Efficiency Loss

The cost to society created by market inefficiency, often associated with the misallocation of resources or markets not reaching equilibrium.