Mogo Manufacturing Company Accounts for Its Inventories by the FIFO

question 105

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, 2017, 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:

Social Sciences

Academic disciplines that study human society and social relationships through various methods of empirical investigation and critical analysis.

Business

Organized efforts by individuals or entities to produce and sell goods and services for profit.

Social Exclusion

The process through which individuals or groups are systematically blocked from rights, opportunities, and resources that are available to others in society.

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Social class refers to divisions within a society based on social and economic status, often determined by wealth, occupation, and educational attainment.