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question assume that toyota motor company was consistently profitable and hence payi 4281312

Question

Assume that Toyota Motor Company was consistently profitable and, hence, paying federal income taxes. Assuming a corporate income tax rate of 40%.

How much did Toyota save on federal income taxes during 2007 through the use of LIFO and cumulatively (over all prior years including 2007) how much Toyota saved on federal income taxes through the use of LIFO?

 

 

December 31,

 

 

December 31,

 

2007

2006

 

ASSETS

 

 

 

 

 

 

Automotive

 

 

 

 

 

 

Cash and cash equivalents

 

$

20,678

 

 

$

16,022

 

Marketable securities (Note 3)

 

 

2,092

 

 

 

11,31

 

Loaned securities (Note 3)

 

 

10,267

 

 

 

5,256

 

Total cash, marketable and loaned securities

 

 

33,037

 

 

 

32,588

 

Receivables, less allowances of $196 and $174

 

 

4,53

 

 

 

3,163

 

Inventories (Note 8)

 

 

10,121

 

 

 

10,017

 

Deferred income taxes

 

 

532

 

 

 

1,569

 

Other current assets

 

 

5,514

 

 

 

7,616

 

Current receivable from Financial Services (Note 1)

 

 

509

 

 

 

 

Total current assets

 

 

54,243

 

 

 

54,953

 

 

 

 

 

 

 

 

 

 

NOTE 8.  INVENTORIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Inventories at December 31 were as follows (in millions):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2007

 

 

2006

 

Raw materials, work-in-process and supplies

 

$

4,36

 

 

$

4,334

 

Finished products

 

 

6,861

 

 

 

6,698

 

 

 

 

11,221

 

 

 

11,032

 

Less: Last-in, first-out method (“LIFO”) adjustment

 

 

(1,100

)

 

 

(1,015

)

Total inventories

 

$

10,121

 

 

$

10,017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2007

 

 

2006

 

Sales and revenues

 

 

 

 

 

 

Automotive sales

 

$

154,379

 

 

$

143,249

 

Financial Services revenues

 

 

18,076

 

 

 

16,816

 

Total sales and revenues

 

 

172,455

 

 

 

160,065

 

 

 

 

 

 

 

 

 

 

Costs and expenses

 

 

 

 

 

 

 

 

Automotive cost of sales

 

 

142,587

 

 

 

148,866

 

Selling, administrative and other expenses

 

 

21,169

 

 

 

19,148

 

Goodwill impairment

 

 

2,4

 

 

 

 

Interest expense

 

 

10,927

 

 

 

8,783

 

Financial Services provision for credit and insurance losses

 

 

668

 

 

 

241

 

Total costs and expenses

 

 

177,751

 

 

 

177,038

 

 

 

 

 

 

 

 

 

 

Automotive interest income and other non-operating income/(expense), net

 

 

1,161

 

 

 

1,478

 

Automotive equity in net income/(loss) of affiliated companies

 

 

389

 

 

 

421

 

Gain on sale of The Hertz Corporation (“Hertz”) (Note 20)

 

 

 

 

 

 

Income/(Loss) before income taxes

 

 

(3,746

)

 

 

(15,074

)

Provision for/(Benefit from) income taxes (Note 19)

 

 

(1,294

)

 

 

(2,655

)

Income/(Loss) before minority interests

 

 

(2,452

)

 

 

(12,419

)

Minority interests in net income/(loss) of subsidiaries

 

 

312

 

 

 

210

 

Income/(Loss) from continuing operations

 

 

(2,764

)

 

 

(12,629

)

Income/(Loss) from discontinued operations (Note 20)

 

 

41

 

 

 

16

 

Income/(Loss) before cumulative effects of changes in accounting principles

 

 

(2,723

)

 

 

(12,613

)

Cumulative effects of changes in accounting principles (Note 28)

 

 

 

 

 

 

Net income/(loss)

 

$

(2,723

)

 

$

(12,613

)

 

 

 

 

 

 

 

 

 

                 

 

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