For Nikes 2023 10-K Form Assuming rising prices, Nike’s inventory method results in more net income than if LIFO was used. True False<\/p>\n\n\n\n
The correct answer and explanation is:<\/strong><\/mark><\/p>\n\n\n\n Correct Answer: True<\/strong><\/p>\n\n\n\n Nike, Inc., as per its 2023 Form 10-K<\/strong>, uses the FIFO (First-In, First-Out)<\/strong> method for inventory valuation. This choice significantly affects the financial reporting of net income<\/strong>, particularly in environments where prices are rising<\/strong>, such as during periods of inflation.<\/p>\n\n\n\n Since prices of raw materials, labor, and transportation have generally been increasing, Nike\u2019s use of FIFO means that:<\/p>\n\n\n\n In the 2023 10-K, Nike confirms the use of FIFO<\/strong> for inventory. This inventory method aligns with U.S. GAAP and is commonly used by companies looking to present stronger earnings during inflationary periods. If Nike were to use LIFO<\/strong>, the reported net income would likely be lower<\/strong>, due to higher COGS from newer, more expensive inventory.<\/p>\n\n\n\n Given that prices are rising and Nike uses FIFO, the company benefits from higher net income<\/strong> than it would under LIFO. Thus, the statement is True<\/strong>.<\/p>\n\n\n\n Note: The LIFO method is not permitted under IFRS (International Financial Reporting Standards), so companies like Nike that operate globally typically use FIFO or weighted-average costing.<\/em><\/p>\n\n\n\nExplanation:<\/h3>\n\n\n\n
FIFO vs. LIFO in Inflationary Times:<\/h4>\n\n\n\n
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Nike\u2019s 10-K Disclosure:<\/h4>\n\n\n\n
Conclusion:<\/h4>\n\n\n\n
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