Estimate the effect on cost of goods sold

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Income statement and balance sheet information abstracted from a recent annual report of The Kroger Company, one of the world's largest retailers, appears below:
The significant accounting policies note disclosure contained the following:
Inventories (in part)
Inventories are stated at the lower of cost (principally on a LIFO basis) or market. In total, approximately 98% of inventories were valued using the LIFO method. Cost for the balance of the inventories was determined using the first-in, first-out ("FIFO") method. Replacement cost was higher than the carrying amount by $800 million at January 31, 2009, and by $604 million at February 2, 2008.

Required:

1. Why is Kroger disclosing the replacement cost of its LIFO inventory?

2. Assuming that year-end replacement cost figures approximate FIFO inventory values, estimate what the beginning and ending inventory balances for the fiscal year ended 1/31/09 would have been if Kroger had used FIFO for all of its inventories.

3. Estimate the effect on cost of goods sold (that is, would it have been greater or less and by how much?) for the fiscal year ended 1/31/09 if Kroger had used FIFO for all of its inventories.

Reference no: EM131000493

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