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statements, respectively, and issued unqualified opinions that
those respective financial statements presented fairly, in all
material respects, the financial position of Consolidated and the
results of its operations and cash flows for 1990 and 1991 in
conformity with generally accepted accounting principles (GAAP).
For financial reporting purposes, Consolidated calculated
its inventories by using LCM and (1) the LIFO method for new
parts, labor, and overhead and (2) the FIFO method for customer
cores. For such purposes, Consolidated reflected customer cores
in its inventories at the amounts (core supplier amounts) that
core suppliers were charging for similar types of core supplier
cores.
For tax purposes, in determining its yearend inventories,
Consolidated included (1) customer cores in its finished goods
inventory at the core supplier amounts and (2) customer cores in
its unprocessed cores raw material inventory and its goods in
process inventory at scrap value (Consolidated's FIFO-LCM
method).
For purposes of this case, both cores and new parts used by
Consolidated to produce remanufactured automobile parts are
treated as raw materials under GAAP and subchapter E, chapter 1,
subtitle A of the Code relating to accounting periods and methods
of accounting, and they shall be referred to herein as raw
materials.
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