The accounting net profit included a deduction of $30,000 for the cost of goods sold based on the following information:
Cost of Goods Sold Opening Stock Purchases
Cost of Goods Sold
40,000 90,000 60,000 30,000
For accounting purposes, the closing stock above was based using the LIFO Method. The Opening stock value for tax purposes was $50,000.
The FIFO Method however produces the following results for stock value at the end of
Cost Price Replacement Price Market Selling Value
$ 45,100 47,000 49,000
The company wishes to minimise its taxation.