- When do you you use the diluted EPS vs Normal EPS in calculating various ratios 2. When you increase the inventory by the LIFO reserve how do you know when to increase equity by the whole LIFO reserve or increase equity by (1-t)*LIFO Reserve and deferred taxes by t*LIFO reserve…thanks!!!
- I would think all the time but I don’t think it will be the case 2. I think you need to increase with adjusted after tax value
- florin got it. CFA says, “[Since there is]…no history of LIFO invasions we cannot assume that its inventory will be liquidated without violating the going-concern assumption. Thus, tax recognition of the LIFO reserve is an unrealistic assumption, and we do not make any adjustments for taxes.” T/G
florin says after tax, and trader says no tax adjustments. Which is it?
I came across a question which had both as answers, the correct answer was no tax adjustment.
This is just something I came across, what is a LIFO Invasion? Unless the question states it, we do not adjust for taxes?