Question

Compute the increase or decrease in the pretax operating profit (loss) that would have been reported for the current year had GE employed FIFO accounting for all inventory for both years. 2. Compute the increase or decrease in pretax operating profit that would have been reported had GE employed LIFO but not reduced inventory quantities during the current year

Answer 1

The operating loss that would have been reported for the current year is $150 million.

How to calculate the pretax operating profit?

The pretax operating profit or loss will be calculated thus:

Difference in beginning inventory = $2076

Less: Difference in ending inventory = $2226

Difference in cost of goods sold = $150

Therefore, the operating loss that would have been reported for the current year is $150 million.

The change in cost of goods sold of $23 million shows that it is a change in the pretax operating profit. Therefore, as prices increase, the net income before taxes would be $23 million lower.

Learn more about operating loss on:

https://brainly.com/question/25530656