The Company Has Consistently Used the LIFO Inventory Method and Has

question 43

Essay

The company has consistently used the LIFO inventory method and has deferred over $1 million of income from using that method.However, in the last two years, the prices it pays for goods has been decreasing.Therefore, the
company is considering changing to the FIFO inventory method.What would be some tax consequences of the change?

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Definitions:

Contracts Valid

Agreements between parties that meet all legal requirements to be enforceable.

Collateral Promise

An ancillary agreement to answer for the debt or obligation of another person if that person fails to meet their obligation.

Principal Debtor's Debt

The main amount of money that a debtor is obligated to pay back, excluding interest or additional fees.

Oral

Relating to the spoken word or communication by mouth, as opposed to written or non-verbal means.