hi, i got a question on reading 21.
the information as attached table
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and
Crux and mikko use LIFO while Rolby uses FIFO method.
To compare the fnancial performance of the three companies, Groff decides to
convert LIFO fgures into FIFO figures, and adjust figures to assume no valuation
allowance is recognized by any company.
Question:
Rolby’s net profit margin for the year ended 31 December 2018, after the adjustments suggested by Gro, is closest to:
A 6.01%.
B 6.20%.
C 6.28%.
the answer is B.
in the explaination, Net income adjusted = Net income (FIFO) + Charges included in cost of goods sold for inventory write-downs, after tax = 327+ 15 x ( 1 - 30%).
However, i thought that net income adjusted must be computed using net income (NI) under FIFO and excluding charges for increases in valuation allowances = 327 - 15x(1-30%)???
Could you explain for me.
thank you!
