Haley Company Purchased Two Identical Inventory Items

question 104

Multiple Choice

Haley Company purchased two identical inventory items. The item purchased first cost $32.00. The item purchased second cost $35.00. Haley sold one of the inventory items for $60.00. Based on this information:

• A)the amount of ending inventory is $32.00 if Haley uses the LIFO cost flow method.
• B)the amount of gross margin is $26.50 if Haley uses the weighted average cost flow method.
• C)the amount of cost of goods sold is $32.00 if Haley uses the FIFO cost flow method.
• D)All of the above are correct.

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Definitions:

Tax Depreciation

The allowance for a decrease in the value of business assets for tax purposes, calculated under specific regulations and used to reduce taxable income.

Book Depreciation

The depreciation of an asset recorded in the financial statements of a business, calculated using the chosen depreciation method.

Tax Rate

The percentage at which an individual or corporation is taxed, which can vary depending on income level, type of tax, or jurisdiction.

Deferred Tax

A tax obligation that a company owes in the future due to timing differences between its taxable income and its accounting earnings.