Place yourself in the position of an upper-level manager in the corporate office of The Home...

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Place yourself in the position of an upper-level manager in the corporate office of The Home Depot. You are in a meeting, the purpose of which is to discuss the inventory cost-flow method that is most...

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Place yourself in the position of an upper-level manager in the corporate office of The Home Depot.
You are in a meeting, the purpose of which is to discuss the inventory cost-flow method that is most appropriate for the company. You realize that the method you recommend would have important implications to the calculation of "ending inventory" of your company's balance sheet and "cost of goods sold" on the income statement. You are further aware of the tax implications of a given method.
For this Discussion: In your opinion, which inventory cost-flow method is most appropriate? Why?

005_ku4d85k-zg11bnna.ppt 005_i08d85k-5p4fnhzh.docx

Answered Same Day Dec 20, 2021

David · Accepted Answer

Week 03 Discussion - Inventory Cost-Flow Assumptions - Why They Matter: 
Place yourself in the position of an upper-level manager in the corporate office of The 
Home Depot. 
You are in a meeting, the purpose of which is to discuss the inventory cost-flow method 
that is most appropriate for the company. You realize that the method you recommend 
would have important implications to the calculation of "ending inventory" of your 
company's balance sheet and "cost of goods sold" on the income statement. You are 
further aware of the tax implications of a given method. 
For this Discussion: In your opinion, which inventory cost-flow method is most 
appropriate? Why? 
Solution: 
Features of FIFO – First-in-First-Out method: 
The first-in inventories are assumed to be sold first according to FIFO method.  The cost of 
goods sold would therefore, reflect the earlier purchased inventory costs, which would be 
naturally lower under conditions of inflation.  In the balance sheet, the merchandise inventory 
would reflect the latest purchase price of the inventory,

Place yourself in the position of an upper-level manager in the corporate office of The Home Depot. You are in a meeting, the purpose of which is to discuss the inventory cost-flow method that is most...

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