Lincoln Corporation and Continental Incorporated are identical companies except that Lincoln complies with U. S. Generally Accepted Accounting Principles and Continental complies with International Financial Reporting Standards. Assuming an inflationary environment and stable inventory quantities, which permissible cost flow assumption will minimize each firm’ s pre-tax financial income Lincoln CorporationContinental Incorporated（）①A. Last-in, first-outLast-in, first-out ②B. First-in, first-out Average cost ③C. Last-in, first-out Average cost
A. ①
B. ②
C. ③
参考答案：C
解析：
LIFO will result in the lowest pre-tax financial income and FIFO will result in the highest pre-tax income. Average cost pre-tax financial income will fall in the middle. LIFO is allowed under U.S. GAAP but is not allowed under IFRS. Thus, Lincoln should choose LIFO and Continental should choose average cost in order to minimize pre-tax financial income.