116.In a period of falling prices, which inventory method would result in the lowest tax burden?
a.Average-cost.
b.FIFO.
c.No difference.
d.Cannot be determined.
117.Henri Company uses the average-cost inventory method. Its 2014 ending inventory was €40,000, but it would have been €60,000 if FIFO had been used. Thus, if FIFO had been used, Henri’s income before income taxes would have been
a.€20,000 greater.
b.€20,000 less.
c.the same.
d.not determinable without the tax rate.
118.Franco Company uses the FIFO inventory method. Its 2014, the company reported net income of €820,000. Had average-cost been used, the company would have reported net income of €760,000. Assuming a 40% tax rate, what is the impact of the inventory cost flow assumption on Franco's taxes for 2014?
a.Franco would pay €24,000 more in taxes for 2014 as a result of using FIFO inventory method rather than average-cost.
b.Franco would pay €36,000 less in taxes for 2014 as a result of using FIFO inventory method rather than average-cost.
c.The inventory method does not impact the amount of income tax paid.
d.Not determinable without income before taxes.
119.Breguet Company uses the FIFO inventory method. The company reported inventory of CHF2,270,000 on its December 31, 2014 statement of financial position. Had average-cost been used, the company would have reported inventory of CHF1,860,000. The company's tax rate is 30%. What is the impact of the inventory cost flow assumption on Breguet's 2014 financial statements?
a.Income before taxes reported by Breguet would be CHF410,000 lower as a result of using the FIFO cost flow assumption.
b.Breguet would pay CHF123,000 less in taxes for 2014 as a result of using the FIFO cost flow assumption.
c.Income after taxes reported by Breguet would be CHF287,000 higher as a result of using the FIFO cost flow assumption.
d.The only financial statement affected by the cost flow assumption is the statement of financial position, which would report CHF410,000 more in inventory as a result of using the FIFO cost flow assumption.
120.Aiwa Inc. uses the average-cost inventory method. In 2014, the company reported net income of ¥59,600,000. Had average-cost been used, the company would have reported net income of ¥58,900,000. Assuming a 25% tax rate, what is the impact of the inventory cost flow assumption on Aiwa's taxes for 2014?
a. Aiwa would pay ¥175,000 less in taxes for 2014 as a result of using the average-cost inventory method rather than FIFO.
b. Aiwa would pay ¥525,000 less in taxes for 2014 as a result of using the average-cost inventory method rather than FIFO.
c. The inventory method does not impact the amount of income tax paid.
d. Not determinable without income before taxes.
121.For the current month, the beginning inventory of Elipresse Inc. consisted of 3 units that cost CHF5,500 each. During the month, the company made two purchases: 4 units at CHF5,800 each and 1 units at CHF5,750. Elipresse sold 5 units during the month. If Elipresse uses specific identification and wishes to maximize net income, the units costs allocated to cost of goods sold will be:
a.5 units@CHF5,500.
b.4 units@CHF5,800 and 1 unit @CHF5,750
c.3 units@CHF5,500 and 1 unit @CHF5,800
d.3 units@CHF5,500, 1 unit @CHF5,750and 1 unit @CHF5,800
122.At year-end, Dana Corporation has 3,000 units of Lolland, 3,000 units of Falster, and 4,500 units of Jultand in its ending inventory. Specific data with respect to each product follows:
Lolland Falster Jutland
Historical cost€55€70€98
Net realizable value 48 77 94
What amount will Dana report for ending inventory using lower-of-cost-or-net realizable value?
a.€777,000.
b.€792,000.
c.€816,000.
d.€837,000.
123.Carlsberg Corporation has 2,000 units of product#1and 4,000 units of product#2 in its inventory at December 31, 2014. Specific data with respect to each product follows:
Product#1Product#2
Historical costCHF40CHF70
Net realizable value4554
What amount will be reported on the company statement of financial position at December 31, 2014 for ending inventory using lower-of-cost-or-net realizable value?
a.CHF220,000.
b.CHF288,000.
c.CHF296,000.
d.CHF306,000.
124.At December 31, 2014, Bosan Corporation has 4,900 units of model 63 and 3,500 units of model 64 in its ending inventory. Specific data with respect to each product follows:
Model 63Model 64
Historical costW7800W8700
Net realizable value77008800
What amount will be reported for inventory on Boson's statement of financial position after the company applies LCNRV?
a.W75,950,000.
b.W69,020,000.
c.W68,530,000.
d.W68,180,000.
125.Net realizable value is
a.original cost plus costs to complete and sell.
b.selling price.
c.original cost less costs to complete and sell.
d.selling cost less costs to complete and sell.