Question - In 2013, Gail changed from the lower of cost or market FIFO method to the LIFO inventory method. The ending inventory for 2012 was computed as follows:
FIFO Cost
A $26,000
B 52,000
C 30,000
Replacement Cost
A $15,000
B 55,000
C 7,000
Lower of cost or Market
A $15,000
B 52,000
C 7,000
The total of Lower of cost or market is $74,000
Item C was damaged goods, and the replacement cost used was actually the estimated selling price of the goods. Te actual cost to replace item C was $32,000.
A) What is the correct beginning inventory for 2013 under the LIFO method?
B) What immediate tax consequences (if any) will result from the witch to LIFO?