Decision Cases

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Complete the following for a discussion Board.

The purpose of this assignment is to discuss and critically analyze the accounting- and finance-related aspects of the business situations that directly relate to the frameworks, theories, concepts, and topics covered in the unit. Use the material covered in your textbook readings, instructional material, and other course material to evaluate the information provided and thoroughly answer the questions in the DB Post.

Decision Case 5-2

Decision Case 5-2

Reading and Interpreting Walgreens Boots Alliance’s Inventory Note

    LO67

    Walgreen s Boots Alliance, Inc. and Subsidiaries’ (the company created with the combination of Walgreens and Boots Alliance) Form 10-K includes the following in the note that summarizes its accounting policies:

    • InventoryThe Company’s Retail Pharmacy USA segment inventory is accounted for using the last-in-first-out (“LIFO”) method. At August 31, 2015 and August 31, 2014, Retail Pharmacy USA segment inventories would have been greater by $2.5 billion and $2.3 billion, respectively, if they had been valued on a lower of first-in-first-out (“FIFO”) cost or market basis.

    Required

  1. What inventory costing method does Walgrseens Boots Alliance use for its Retail Pharmacy USA segment? Explain why you think the company uses this method.
  2. What is the amount of the LIFO reserve at the end of each of the two years?
  3. Explain the meaning of the increase or decrease in the LIFO reserve during 2015. What does this tell you about inventory costs for the company? Are they rising or falling? Explain your answer.

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