financeCaterpillar Inc. and Komatsu Ltd. are international manufacturers of industrial and construction equipment. Caterpillar's headquarters is in the United States, while Komatsu's headquarters is in Japan. The following information comes from their recent financial statements.
$$
\begin{array}{lrrr}
\text{Caterpillar-fiscal year ending December 31, 2017 (\$ millions)}\\
\hspace{5pt}\text{Cost of goods sold}&\$31,049\\
\hspace{5pt}\text{Beginning inventory}&8,614\\
\hspace{5pt}\text{Ending inventory}&10,018\\
\text{Komatsu-fiscal year ending March 31, 2018 (\yen\ millions)}\\
\hspace{5pt}\text{Cost of goods sold}&\yen1,765,832\\
\hspace{5pt}\text{Beginning inventory}&533,897 \\
\hspace{5pt}\text{Ending inventory}&730,288\\
\end{array}
$$
In its footnotes, Caterpillar also provides the following information (assume no LIFO liquidation):
**Inventories**
Inventories are stated at the lower of cost or market. Cost is principally determined using the last-in, first-out (LIFO) method. The value of inventories on the LIFO basis represented about 65 percent of total inventories on December 31, 2017, and about 60 percent on December 31, 2016. If the FIFO (first-in, first-out) method had been in use, inventories would have been $1,934 million and$2,139 million higher than reported at December 31, 2017 and 2016, respectively.
REQUIRED
d. What effect has the use of LIFO inventory costing had on Caterpillar's pretax income and tax liability for fiscal year 2017? (Assume a 25% tax rate.) politics of the united states 1st Edition•ISBN: 9780078953125 (1 more)Carl A. Woloszyk, Grady Kimbrell, Lois Schneider Farese1,600 solutions
10th Edition•ISBN: 9781337902571 (1 more)Eugene F. Brigham, Joel Houston777 solutions
6th Edition•ISBN: 9780078692512McGraw-Hill Education3,760 solutions
17th Edition•ISBN: 9780538448734 (1 more)Mary Hansen3,734 solutions
