Financial Statement Analysis Cases Case: Prab Robots, Inc.

Financial Statement Analysis CasesCase: Prab Robots, Inc.Prab Robots, Inc., reported the following information regarding 2011–2012 inventory.Prab Robots, Inc.20122011Current assetsCash$153,010$538,489Accounts receivable, net of allowance for doubtful accounts of $46,000 in 2012 and $160,000 in 20111,627,9802,596,291Inventories (Note 2)1,340,4941,734,873Other current assets123,38890,592Assets of discontinued operations—32,815Total current assets3,244,8724,993,060Instructions(a) Why might Prab Robots, Inc., use two different methods for valuing inventory?(b) Comment on why Prab Robots, Inc., might disclose how its LIFO inventories would be valued under FIFO.(c) Why does the LIFO liquidation reduce operating costs?(d) Comment on whether Prab would report more or less income if it had been on a FIFO basis for all its inventory.