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Inventories and Earnings

See the attached file.
Both in the OCR and attached to this assignment there is a PDF file of International Paper's (IP) most recent 10-K (annual report). Using the information contained in the annual report please answer ALL of the following questions. Much of the information you need for the adjustments is near Note 7: pg 70 Supplementary Financial Statement Information.

1. IP reports inventories using the LIFO method. Commonly analysts re-cast LIFO reported numbers into what they would have been under FIFO in order to compare them to other firms. What would each of the following financial statement values have been assuming IP used FIFO? Assume a 35% effective tax rate where needed.

a. Reported inventory for the last two years
b. Cost of Goods Sold for the current year
c. Retained Earnings
d. What other accounts, if any, would be influenced by this change and what would those values be?

2. Using the information for IP what are each of the following:

a. The average total lifespan of the assets
b. The average age of the assets
c. The average remaining life
d. The depreciation method used (see Note 1).

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The solution discusses answers to questions regarding inventories and earnings.

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