Excerpted from Exxon Mobil%u2019s 2012 annual report is the following information about its inventories, most of which are carried at LIFO.
In 2012, 2011 and 2010, net income included gains of $328 million, $292 million and $317 million, respectively, attributable to the combined effects of LIFO inventory accumulations and drawdowns. The aggregate replacement cost of inventories was estimated to exceed their LIFO carrying values by $21.3 billion and $25.6 billion at December 31, 2012, and 2011, respectively.
Ending inventories of crude oil and products for 12/31/12 and 12/31/11 were $10,836 and 11,665, in millions respectively.
In 2012, ExxonMobil reported cost of goods sold of $303,670 (in millions) and income before income taxes of $78,726 (in millions) with income tax expense of $31,045 (in millions).
A) What is meant by "drawdowns"?
B) Determine what ending inventory would have been if FIFO had been used for 12/31/12 and 12/31/11, respectively.
C) Determine CGS and income before income taxes if Exxon Mobil had used FIFO.
D) Roughly recompute its tax bill if it had used FIFO.