If iw ere to change FIFO to LIFO
- that would reduce cogs and increase income by the change in lifo reserve x (1-t)
- the balance sheet inventory will increase by the lifo reservece + (1-t)
however, theres a disparity where my net income increase is not the same as my inventory increase.
wouldn’t this create a disparity in my formula asset - liability = equity since income flows into retained earnings?