Inventory method as of the inventory cost was 50000

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inventory method. As of December 31, 2009, the inventory cost was $50,000 and its market price was $40,000. At the time of filing his 2010 income tax return, George changed to the LIFO method. The ending inventory at cost on December 31, 2010, was $75,000 and the market price of the goods totaled $35,000. Which of the following statements is correct? A. The beginning inventory for 2010 is $50,000, and George must spread a $10,000 adjustment ($50,000 $40,000) evenly over 2010, 2011, and 2012. B. The beginning inventory for 2010 is $40,000. C. The beginning inventory for 2010 is $50,000, and George must spread a $10,000 adjustment over the three previous years. D. The change is invalid since the taxpayer did not apply for the change by the end of the tax year of change. E. None of the above. 93. Crow Corporation has used the LIFO inventory method for the past 10 years. During that time, the prices Crow pays for the inventory have increased by 50%. Its inventory value when it first adopted LIFO was $5,000,000. The company began using a just-in-time inventory system the same year it adopted LIFO, and although sales have increased, the quantities of goods on hand at year end has not changed in the past ten years. The corporation's marginal tax rate has been 35% in all of the years. As a result of the LIFO election: A. The company has deferred $5,000,000 of income tax. B. The company has deferred $1,750,000 ($5,000,000 .35) of income tax. C. The LIFO election did not defer any income tax because the quantity of goods on hand has not changed. D. The company has deferred $875,000 [(.50)($5,000,000)(.35)] of income tax. E. None of the above. 94. If a company uses LIFO for its income tax return, it must use: A. LIFO for reporting to stockholders and creditors, and the taxpayer may not include in a footnote the earnings as computed using FIFO. B. FIFO for reporting to stockholders and creditors. C. LIFO for reporting to stockholders and creditors, and the taxpayer may include in a footnote the earnings as computed using FIFO. D. Any method acceptable under GAAP for reporting to stockholders and creditors. E. None of the above. 95. Mallard Auto Parts, Inc. has on hand 1,000 fenders for 1953 Studebakers. Mallard purchased the fenders in 1965 for $30 each and the selling price is $400 each. Only rarely does Mallard sell a Studebaker fender and it is highly unlikely that more than 100 of the remaining fenders will ever be sold. However, Mallard has ample storage space and feels an obligation to Studebaker owners. Therefore, the company will not salvage the fenders and will continue to sell them for $400 each. Scrap value of the fenders is $5 each. Under the lower of cost or market inventory method: A. Mallard can expense the 900 excess fenders. B. Mallard can expense all 1,000 of the fenders because of the unlikelihood they will be sold. C.
The fenders should be valued at $7,500 [(100 $30) + (900 $5)]. D. The fenders should be valued at $5,000 (1,000 $5). E. None of the above. 17 96. The Multi Department

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