The following informationis available for Leno Company:
- Sales $695,000
- Goods Available $535,000
- Ending inventory (using LIFO) $246,000
Leno Company currently uses the FIFO cost flow method for financial statement reporting and for tax reporting. It is considering changing to the LIFO cost flow method for tax reporting purposes. If leno uses LIFO, its ending inventory would be$175,000.
1. Determine the cost of Goods sold under LIFO and FIFO.
2. Why would Leno want to changeto LIFO for tax reporting?
3. Discuss any changes that Leno would have to make for GAAP reporting if it does change LIFO for tax reporting?