Question: Firm A and Firm B sell the same product. The cost of this product has been rising steadily throughout the year. Both companies reported the same net income for the year, although Firm A used the first-in, first-out method of pricing inventory, while Firm B used the last-in, first-out method.
[A] Determine which firm is minimizing income taxes it must pay?
[B] Determine which firm would have reported the higher net income if both companies had used the same method of pricing inventory?