Unformatted text preview: According to Jeffrey Gramlich, LIFO produces lower gross income and lower tax liability during periods of rising costs and stable or increasing inventory levels. In order to find an inventory method that would minimize the tax liability for a firm about to enter the microcomputer industry, we need to evaluate the cost behavior in the specific industry. If the costs are regularly falling, then we could recommend FIFO, because the firm would get rid of the most expensive items first and would reduce their gross income by reporting a higher cost of goods sold, this would lead to a lower tax liability....
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- Fall '08
- inventory method, Jeffrey Gramlich, lower tax liability