Case 3-9 Accounting Standards General Motors and Ford use the last‐in, first‐out

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Case 3-9
Accounting Standards
General Motors and Ford use the last‐in, first‐out (LIFO) method to value their inventories. Honda (of Japan) and Daimler‐Benz (manufacturer of Mercedes‐Benz of Germany) use the first‐in, first‐out (FIFO) method. Under LIFO, recent costs are expensed as cost of goods sold; under FIFO, older costs are expensed as cost of goods sold.
Required:
Given the income statement effects of LIFO versus FIFO, how will the balance sheet inventory amounts differ between General Motors and Ford versus Honda and Daimler‐Benz? In other words, will inventory be reported amounts representing recent costs or older historical costs? In your opinion, which balance sheet amounts would be more useful to financial statement users in making decisions to buy or sell shares of a company’s stock?
Discuss the concept of conservatism. In your opinion, which is more conservative, General Motors and Ford or Honda and Daimler‐Benz? Explain.
INSTRUCTIONS
You are to follow the case instructions in the text as you complete your selected case. Items to
include are outlined as follows:
 500 words in length that addresses all of the criteria for the selected case.
 Your assignment must be in current APA format. You should use the APA-7 template
for Graduate and Doctoral Students.
 You must support your assertions with at least two citations. In addition, you will provide
a biblical application for the subject matter of the case.
 Acceptable sources include peer-reviewed journal articles, FASB Codification, the
textbook, and the Bible.
Note: Your assignment will be checked for originality via the Turnitin plagiarism tool.

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