week 3 team - liability on all the companies President...

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Summary of Accounting Issues “Rush to Defend Tax Rule on Inventory and Profits” discusses the proposals that President Obama would like to instill within all public companies within the United States. This proposal discusses the inventory method. Companies that manufacture steel, metal, oil and gas would benefit most from LIFO. Any company affected by inflation within the United States would benefit from this method. LIFO determines the cost of goods sold and the income earned by the company. Using this method would allow the company to have fewer taxes through using the cost of goods sold. President Obama states that he would prefer every company to use FIFO rather than LIFO because of taxes. Taxable income would increase with the use of FIFO, as well as tax
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Unformatted text preview: liability on all the companies. President Obama stated that this new proposal could create more jobs within the manufacturing industry. Companies will not be able to use the cost of the most recent goods, but instead would have to use the cost of the oldest goods through the inventory and tax liability. The company’s profit will decrease because the price of selling the items will not be as large. If the companies had to switch from LIFO to FIFO then each would have to go back through their inventory and recalculate. Reference Pear, R. (2011, July 12). Rush to Defend Tax Rule on Inventory and Profits. The New York Times . Retrieved from http://www.nytimes.com/2011/07/13/us/politics/13tax.html?_r=4...
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