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charging as of that date and which was reflected on the computer-
ized price update tape that each such manufacturer had provided
to that vendor. (We shall refer to the prices reflected on those
tapes at which the different types of parts were valued as of the
date of Mountain State Ford's physical inventory as replacement
cost.) The replacement cost on which Mountain State Ford valued
the parts in its parts inventory as of the date of the physical
inventory was not necessarily the same as the invoice prices
thereof. In order to determine the value of its parts inventory
at the end of each year (ending parts inventory), Mountain State
Ford adjusted, in a manner not disclosed by the record, its parts
inventory valued at the time of its physical inventory for any
deliveries and returns of parts to it and/or sales of parts by it
between that time and the end of the year. Prior to 1980,
Mountain State Ford's ending parts inventory, determined as just
described, was used as its ending parts inventory for both
financial statement and Federal income tax (Federal tax) pur-
poses.
Throughout the period from its incorporation until the date
in 1978 on which Ford no longer owned any stock of Mountain State
Ford, Mountain State Ford did not use the invoice prices or the
purchases account in maintaining its inventory under its perpet-
ual inventory recordkeeping system. That was because, as dis-
cussed above, Ford required that Mountain State Ford's parts
inventory be valued for Ford parts on the basis of "the dealer
net prices as incorporated in the latest dealer price lists
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