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experts disagree on the appropriate normalizing adjustment for
the correction of the inventory error.
Mr. Sliwoski believed that, since average income for the
69.33-month base period (including the correction years) was
being used, no further adjustment was necessary. The averaging
of the correction years’ income with the income of the 4
precorrection years (which income was almost certainly
understated) would produce an accurate average for the 69.33-
month period, in his view. This position effectively “spread”
the cost of goods sold adjustment over the 69.33-month base
period.
Mr. Kramer, however, believed that the cost-of-goods-sold
adjustment should be spread over 10 years, on the grounds that
Renier had sold the same product line for approximately 20 years
and “it was estimated” that the erroneous inventory method had
been used “for at least half of that period”. As a result, Mr.
Kramer spread the cost-of-goods-sold adjustment over a 10-year
period and excluded from normalized income some 50.67 months’
worth of the adjustment which fell outside the base period.
With respect to the cost-of-goods-sold adjustment, we
conclude that the estate has failed to show error in respondent’s
approach. The estate has offered scant evidence of the nature of
the inventory adjustment; there is no evidence in the record of
the exact nature or duration of the error in accounting for cost
of goods sold. Such evidence was presumably available to the
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