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The accounting net profit included a deduction of $30,000 for the cost of goods sold based on the following information:
The accounting net profit included a deduction of $30,000 for the cost of goods sold based on the following information:
Cost of Goods Sold Opening Stock Purchases
Closing Stock
Cost of Goods Sold
$ 50,000
40,000 90,000 60,000 30,000
For accounting purposes, the closing stock above was based using the LIFO Method. The Opening stock value for tax purposes was $50,000.
The FIFO Method however produces the following results for stock value at the end of
the year:
Cost Price Replacement Price Market Selling Value
$ 45,100 47,000 49,000
The company wishes to minimise its taxation.
