Final answer:
The use of LIFO inventory costing method impacts GE's pretax income and tax expense for 2010. LIFO assumes that the most recent inventory purchases are sold first, resulting in lower taxable income and tax expense. The specific impact depends on GE's inventory costs and turnover.
Step-by-step explanation:
The use of LIFO (Last-In, First-Out) inventory costing method affects GE's pretax income and tax expense for 2010. LIFO assumes that the most recent inventory purchases are sold first, resulting in higher COGS (Cost of Goods Sold) and lower taxable income. As a result, the pretax income is lower, and the tax expense is also lower due to the reduction in taxable income.
In 2010, if GE used the LIFO method and experienced an increase in its inventory costs, it would have higher COGS than if it used a different inventory costing method like FIFO (First-In, First-Out). This, in turn, would lower its pretax income, reducing the amount of income subject to taxation, and resulting in a lower tax expense.
It is important to note that the choice of inventory costing method can have different effects on a company's financial statements and tax obligations. The impact of LIFO on GE's pretax income and tax expense specifically for 2010 would depend on the specific inventory costs and inventory turnover of the company during that year.