Compare and contrast the different inventory cost flow assumptions. Explain the consequences that result from the use of alternative inventory cost flow assumptions.
2. Based on the information contained in Case C7-6: Interpretation of GAAP and Ethical Issues, could a LIFO liquidation profit create ethical issues? Defend your position.
CASE C7-6
Robin Smith is considering buying shares in Mah Company. The company has reported an increase in net income this year. On careful reading of the notes to the financial statements, Robin learns that the company had a LIFO liquidation this year. Robin understands what caused the liquidation but has asked you for advice about how to interpret it.
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