GG IncUses LIFO

question 45

Multiple Choice

GG Inc.uses LIFO.GG disclosed that if FIFO had been used,inventory at the end of 2016 would have been $15 million higher than the difference between LIFO and FIFO at the end of 2015.Assuming GG has a 40% income tax rate:

• A)Its reported cost of goods sold for 2016 would have been $9 million higher if it had used FIFO rather than LIFO for its financial statements.
• B)Its reported cost of goods sold for 2016 would have been $15 million higher if it had used FIFO rather than LIFO for its financial statements.
• C)Its reported net income for 2016 would have been $9 million higher if it had used FIFO rather than LIFO for its financial statements.
• D)Its reported net income for 2016 would have been $15 million higher if it had used FIFO rather than LIFO for its financial statements.

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