Problem 1: Adjusting from LIFO to FIFO
The following information represents inventories detail included in
Note 6 to the consolidated financial
statements of Hog at December 31, 2018:
6. Additional Balance Sheet and Cash Flow Information
The following information represents additional detail for selected line items included in the consolidated
balance sheets at December 31, and the statements of cash flows for the years ended December 31.
Balance Sheet Information:
Inventories, net (in thousands):
Raw materials and work in process
Motorcycle Finished goods
Part and accessories and general merchandise
Inventory at lower of FIFO cost or net realizable value
Excess of FIFO over LIFO cost (LIFO RESERVE)
Total inventories, net (amount reported on balance sheet)
Inventory obsolescence reserves deducted from FIFO cost were $39.0 million and $38.7 million as of
December 31, 2018 and 2017, respectively
a. Assume the tax rate is 24%, what is the balance sheet adjustment for 2018? Show your work
b. Assume the tax rate is 24%, what is the income statement adjustment for 2013? Show your
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