Communication Case 8-4 on page 442

You have just been hired as a consultant to Tangier Industries, a newly formed company. The company president, John Meeks, is seeking your advice as to the appropriate inventory method Tangier should use to value its inventory and cost of goods sold. Mr. Meeks has narrowed the choice to LIFO and FIFO. He has heard that LIFO might be better for tax purposes, but FIFO has certain advantages for financial reporting to investors and creditors. You have been told that the company will be profitable in its first year and for the foreseeable future.

Required:

Prepare a report for the president describing the factors that should be considered by Tangier in choosing between LIFO and FIFO.

Describes the differential effect on ending inventory

and cost of...