c. Why do companies use cost flow assumptions to determine inventory cost? What cost flow...
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c. Why do companies use cost flow assumptions to determine inventory cost? What cost flow assumption(s) does Deere & Company use to determine inventory cost?
d. Assume that prices that Deere and CNH Global pay for inventory typically increase over time. CNH uses the first-in, first-out (FIFO) cost flow assumption to measure its inventories. In general terms, how do the balance sheet values for inventories of the two companies differ due to their cost flow assumptions? What numbers on the two companies income statements would differ? What if prices typically decrease over time?
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