2011 2010
Raw materials and work in process 2011=$ 4,894 2010=$ 4,708
Finished goods 2011=4,379, 2010=3,951
Unbilled shipments 2011=372, 2010=312
2011=9645, 2010=8972
Less revaluation to LIFO 2011=(606), 2010=(676)
2011=9,039, 2010=$ 8,295
LIFO revaluations decreased $70 million in 2011, compared with decreases of $169 million in 2010 and $82 million in 2009. Included in these changes were decreases of $21 million, $8 million and $6 million in 2011, 2010 and 2009, respectively that resulted from lower LIFO inventory levels. There were net cost decreases in each of the last three years. GEs earnings before income taxesarrow-10x10.pngarrow-10x10.png were $18.891 billion in 2011. Assume a 35% marginal taxarrow-10x10.pngarrow-10x10.png rate.
Requirements:
1) What was the LIFO liquidation profits reported in 2011 both pre-tax and after-tax?
2) Explain what factors cause the difference between the LIFO pre-tax income number and the FIFO pre-tax income number you estimated in requirement 2. (Hint: Reconcile the change in the LIFO reserve for 2011.)