If a company uses LIFO for inventory and leaves a LIFo Reserve of say 10 million. The adjustments to pass i think are: 1) increase inventory by the LIFo reserve; thereby increasing asssets; 2) increase equity by the same amount thereby increaseing shareholders equity. Are there any adjustments to pass to Net Income? CFA Mock Exam says Net Income is increased by the LIFO Reserve.
Are they talking in terms of a liquidation?