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Control Furniture Company: Effect of converting LIFO to FIFO

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Control Furniture Company
Annual Report Excerpts
(Figures in thousands of dollars)

December 31 2015 2016

Inventories at FIFO Cost 846.3 852.6
Excess of FIFO Cost over LIFO Cost (231.4) (257.2)
Inventories at LIFO Cost 614.9 595.4

Given the financial information presented above what would be the effect on net income before taxes in 2016 of converting the company from LIFO to FIFO:

A) Increase of 257.2
B) Decrease of 257.2
C) Increase of 174.9
D) Decrease of 174.9

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Solution Summary

The solution computes the effect of converting from LIFO to FIFO Inventory system.

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