neil1234

Yeah, the first couple of chapters dont look much different than L1, except for the "item set" format questions.

Question: In translating from LIFO to FIFO, the increase in net income is calculated as the after-tax increase in the reserve. This makes sense to me and there is no issue. However, the increase in retained earnings is calculated as the after-tax reserve for the current period. This seems counterintuitive to me. I would think the retained earnings would increase by the amount of increase in net income. Can anybody help to clarify???