Michelle Kwan Inc. sells two products: figure skates and speed skates. At December 31, 2008, Kwan used the first-in, first-out (FIFO) inventory method. Effective January 1, 2009, Kwan changed to the last-in, first-out (LIFO) inventory method. It is impracticable to determine the prior-year effects. As a result, the ending inventory of 2008 for which the FIFO method was used is also the beginning inventory for 2009 for the LIFO method. Any layers added during 2009 should be costed by reference to the first acquisitions of 2009 and any layers liquidated during 2009 should be considered a permanent liquidation. The following information was available from Kwan’s inventory records for the 2 most recent years.

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