Mogo Manufacturing Company Accounts for Its Inventories by the FIFO

question 8

Essay

Mogo Manufacturing Company accounts for its inventories by the FIFO method.The company has consistently allocated building depreciation to production and general administration on the basis of the number of square feet occupied.According to the measurements used,manufacturing requires 90% of the square footage and general administration utilizes 10% of the total square feet.This year,2012,the accountant realized that 5 years ago an addition was made to the portion of the building used for general administration,and the depreciation allocation had not been adjusted.What are the tax accounting implications of this discovery?

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Definitions:

Physical Examination

A thorough assessment conducted by a healthcare provider to check a person's body for signs of disease or abnormality.

Skin Tone

The color and appearance of a person's skin, often determined by pigmentation, skin condition, and blood flow.

African American

A term used to describe Americans of African descent, particularly those whose ancestors were brought to America through the transatlantic slave trade.

Natural Sunlight

The light provided by the sun, which includes a range of electromagnetic radiation essential for Vitamin D synthesis in humans.