Fifo Retained Earnings Solution

STEP 0: Pre-Calculation Summary
Formula Used
Fifo Retained Earnings = Lifo Retained Earnings+Lifo Reserve*(1-Tax Saving)
FRE = LIFORE+LIFOR*(1-T)
This formula uses 4 Variables
Variables Used
Fifo Retained Earnings - Fifo Retained Earnings refer to the portion of a company's retained earnings that is influenced by the first-in, first-out inventory accounting method.
Lifo Retained Earnings - Lifo Retained Earnings refers to the portion of a company's retained earnings that is influenced by the last-in, first-out inventory accounting method.
Lifo Reserve - Lifo Reserve represents the difference between the inventory valuation under the last-in, first-out method, and the first-in, first-out method.
Tax Saving - Tax Saving refers to the reduction in a company's tax liability achieved through various accounting methods, deductions, credits, and other strategies.
STEP 1: Convert Input(s) to Base Unit
Lifo Retained Earnings: 15 --> No Conversion Required
Lifo Reserve: 85 --> No Conversion Required
Tax Saving: 0.05 --> No Conversion Required
STEP 2: Evaluate Formula
Substituting Input Values in Formula
FRE = LIFORE+LIFOR*(1-T) --> 15+85*(1-0.05)
Evaluating ... ...
FRE = 95.75
STEP 3: Convert Result to Output's Unit
95.75 --> No Conversion Required
FINAL ANSWER
95.75 <-- Fifo Retained Earnings
(Calculation completed in 00.004 seconds)

Credits

Creator Image
Created by Aashna
IGNOU (IGNOU), India
Aashna has created this Calculator and 100+ more calculators!
Verifier Image
Verified by Keerthika Bathula
Indian Institute of Technology, Indian School of mines, Dhanbad (IIT ISM Dhanbad), Dhanbad
Keerthika Bathula has verified this Calculator and 50+ more calculators!

9 Financial Modeling and Valuation Calculators

Fifo Cost of Goods Sold
​ Go Fifo Cost of Goods Sold = Lifo Cost of Goods Sold-(Ending Lifo Reserve-Beginning Lifo Reserve)
Return on Common Equity
​ Go Return on Common Equity = (Net Income-Preferred Dividends)/Average Common Equity
Fifo Retained Earnings
​ Go Fifo Retained Earnings = Lifo Retained Earnings+Lifo Reserve*(1-Tax Saving)
Fifo Net Income
​ Go Fifo Net Income = Lifo Net Income+Change in Lifo Reserve*(1-Tax Saving)
Lifo Reserve
​ Go Lifo Reserve = Fifo Inventory Value-Lifo Inventory Value
Segment Debt Ratio
​ Go Segment Debt Ratio = Segment Liabilities/Segment Assets
Segment Turnover
​ Go Segment Turnover = Segment Revenue/Segment Assets
Segment Margin
​ Go Segment Margin = Segment Profit/Segment Revenue
Segment Roa
​ Go Segment Roa = Segment Profit/Segment Assets

Fifo Retained Earnings Formula

Fifo Retained Earnings = Lifo Retained Earnings+Lifo Reserve*(1-Tax Saving)
FRE = LIFORE+LIFOR*(1-T)

What is Fifo Retained Earnings ?

Fifo Retained Earnings is a method that tends to result in higher net income and retained earnings in times of rising prices compared to LIFO, due to the lower COGS. Understanding FIFO retained earnings is crucial for accurate financial analysis, especially when comparing companies that use different inventory valuation methods. During inflation, FIFO retained earnings will be higher than LIFO retained earnings due to lower COGS and higher net income. FIFO results in higher tax expenses, whereas LIFO can provide tax deferrals. FIFO results in higher ending inventory values on the balance sheet during the inflationary period. Retained earnings represent the cumulative net income of a company that has not been distributed to shareholders as dividends. The choice of inventory accounting method impacts the calculation of net income, which in turn affects retained earnings.

How to Calculate Fifo Retained Earnings?

Fifo Retained Earnings calculator uses Fifo Retained Earnings = Lifo Retained Earnings+Lifo Reserve*(1-Tax Saving) to calculate the Fifo Retained Earnings, Fifo Retained Earnings reflect the portion of retained earnings influenced by the FIFO inventory accounting method. Fifo Retained Earnings is denoted by FRE symbol.

How to calculate Fifo Retained Earnings using this online calculator? To use this online calculator for Fifo Retained Earnings, enter Lifo Retained Earnings (LIFORE), Lifo Reserve (LIFOR) & Tax Saving (T) and hit the calculate button. Here is how the Fifo Retained Earnings calculation can be explained with given input values -> 114.75 = 15+85*(1-0.05).

FAQ

What is Fifo Retained Earnings?
Fifo Retained Earnings reflect the portion of retained earnings influenced by the FIFO inventory accounting method and is represented as FRE = LIFORE+LIFOR*(1-T) or Fifo Retained Earnings = Lifo Retained Earnings+Lifo Reserve*(1-Tax Saving). Lifo Retained Earnings refers to the portion of a company's retained earnings that is influenced by the last-in, first-out inventory accounting method, Lifo Reserve represents the difference between the inventory valuation under the last-in, first-out method, and the first-in, first-out method & Tax Saving refers to the reduction in a company's tax liability achieved through various accounting methods, deductions, credits, and other strategies.
How to calculate Fifo Retained Earnings?
Fifo Retained Earnings reflect the portion of retained earnings influenced by the FIFO inventory accounting method is calculated using Fifo Retained Earnings = Lifo Retained Earnings+Lifo Reserve*(1-Tax Saving). To calculate Fifo Retained Earnings, you need Lifo Retained Earnings (LIFORE), Lifo Reserve (LIFOR) & Tax Saving (T). With our tool, you need to enter the respective value for Lifo Retained Earnings, Lifo Reserve & Tax Saving and hit the calculate button. You can also select the units (if any) for Input(s) and the Output as well.
Let Others Know
Facebook
Twitter
Reddit
LinkedIn
Email
WhatsApp
Copied!