LIFO vs FIFO Depreciation Assignment Example | Topics and Well Written Essays - 750 words

LIFO vs FIFO Depreciation - Assignment Example LIFO method results to low net earnings by the company. However, if the company switches to FIFO it will result to Sgreater earnings, but under the condition that price remains invariable during trading period. However, using weighted average could result to greater earnings for the company.Increase in price of assets over time makes FIFO method to yield superior returns than LIFO method since overhead expenditure is lower than returns after increase in value of commodities (Mckee, Garner & Mckee, Y., 2000).   Regardless of the method used, companies would get uniform earnings in the absence of inflation. Also, using weighted average method results to a value which is higher than that of LIFO method, but lower than that of FIFO method.Companies use LIFO approach in order to counter the effects of inflation hence pays less tax. FIFO method is significant in a steady economy, but is helpful when economy is facing increase in price of commodities, because companies can report greater earnings than any other method. However, this result a mismatch of the expenditures incurred in production and the earnings from the products.  Most companies prefer LIFO method when estimating the value of their stock because the associated expenditure is most recent and is generally higher than actual expenditure. This enables companies to pay less income tax to the state. On the other hand, FIFO method is vital in an economy facing inflation because increase in prices result to increase in earnings.

Metrics Estimation Analysis and Teams Assignment

Metrics Estimation Analysis and Teams - Assignment Example It’s essential noting that with this criteria the production process will tend to be more accurate and the management will be in a position of maintaining the quality details of the firm help in improving the competitive advantage (Lincke, Lundberg & Lowe, 2008). When using the rating system the products needs to be picked at random and checked thoroughly to ensure they are accurate. In case a default is detected the production process should be vouched to ensure they are compliant with the targets set for their operations. The process should be in a state where they can link all parties involved. Table 1 defines the information that RSL has captured on previous projects. Table 2 shows the estimates for the equivalent parameters for the components of a new project. Using whichever techniques you wish, generate estimates for the effort required to develop the components of the new project. What reservations would you have in using such data? Looking at the graph above its evident as the time passes the company is increasing their efforts to ensure they meet their shareholders targets. This is crucial and it helps the firm to avoid misusing their efforts before they can identify their marking opportunities. Therefore, it’s necessary to note that efforts are varied according to the needs surrounding that process and the weight the issue caries (Lincke, Lundberg & Lowe, 2008). On the other hand, its essential noting that no matter what effort is exacted the estimation curve will never be at its maximum accuracy. Still the estimates will never change from estimates to factual. There is no amount of efforts can be added to make the estimates accurate. The following page contains data collected from a project at RSL. Provide an analysis report to indicate which components would be of concern going forward. You must provide the details of the graphs and analyses you have used