Question 1 - If you had the choice of selecting between any of the Inventory Cost Flow Methods in either a perpetual or a periodic inventory system which would you chose for the company you are working for (assuming that the company has inventories)? Please justify the reasons and circumstances for your choice. For example, is your company experiencing rising prices or falling prices in general when they are purchasing new products for resale?
Question 2 - Should a company ever switch from FIFO to LIFO or from LIFO to FIFO? Why or why not? When might it make sense to switch? Has your company ever done so that you are aware of?
Question 3 - When I was an Internal Auditor with John Deere & Company years ago an associate of mine was assigned to go to John Deere's branch in Johannesburg, South Africa to help the controller there try to estimate the ending inventories after a fire.
Please select one of the methods to estimate ending inventories that you would recommend to the controller to use and give your reasons why you are recommending it. You also may give any assumptions that you feel you should such as what information would be required for the method that you have selected. You may also give any limitations on the method that you have selected.