Webster Products, Inc., adopted the dollar-value LIFO method of determining inventory costs for financial andincome tax reporting on January 1, 2018. Webster continues to use the FIFO method for internal decision-makingpurposes. Webster’s FIFO inventories at December 31, 2018, 2019, and 2020, were $300,000, $412,500, and$585,000, respectively. Internally generated cost indexes are used to convert FIFO inventory amounts to dollar-value LIFO amounts. Webster estimated these indexes as follows:2018 1.002019 1.252020 1.50Required:1. Determine Webster’s dollar-value LIFO inventory at December 31, 2019 and 2020.2. Describe how the change should have been reported in Webster’s 2018 financial statements.
Webster Products, Inc., adopted the dollar-value LIFO method of determining inventory costs for financial andincome tax reporting on January 1, 2018. Webster continues to use the FIFO method for internal decision-makingpurposes. Webster’s FIFO inventories at December 31, 2018, 2019, and 2020, were $300,000, $412,500, and$585,000, respectively. Internally generated cost indexes are used to convert FIFO inventory amounts to dollar-value LIFO amounts. Webster estimated these indexes as follows:2018 1.002019 1.252020 1.50Required:1. Determine Webster’s dollar-value LIFO inventory at December 31, 2019 and 2020.2. Describe how the change should have been reported in Webster’s 2018 financial statements.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter7: Inventories: Cost Measurement And Flow Assumptions
Section: Chapter Questions
Problem 11P: Olson Company adopted the dollar-value LIFO method for inventory valuation at the beginning of 2015....
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Question
Webster Products, Inc., adopted the dollar-value LIFO method of determining inventory costs for financial and
income tax reporting on January 1, 2018. Webster continues to use the FIFO method for internal decision-making
purposes. Webster’s FIFO inventories at December 31, 2018, 2019, and 2020, were $300,000, $412,500, and
$585,000, respectively. Internally generated cost indexes are used to convert FIFO inventory amounts to dollar-value LIFO amounts. Webster estimated these indexes as follows:
2018 1.00
2019 1.25
2020 1.50
Required:
1. Determine Webster’s dollar-value LIFO inventory at December 31, 2019 and 2020.
2. Describe how the change should have been reported in Webster’s 2018 financial statements.
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