Webster Products, Inc., adopted the dollar-value LIFO method of determining inventory costs for financial and income tax reporting on January 1, 2016. Webster continues to use the FIFO method for internal decision-making purposes. Webster’s FIFO inventories at December 31, 2016, 2017, and 2018, were $300,000, $412,500, and $585,000, respectively. Internally generated cost indexes are used to convert FIFO inventory amounts to dollarvalue LIFO amounts. Webster estimated these indexes as follows: 2016 1.00 2017 1.25 2018 1.50 Required: 1. Determine Webster’s dollar-value LIFO inventory at December 31, 2017 and 2018. 2. Describe how the change should have been reported in Webster’s 2016 financial statements.
Webster Products, Inc., adopted the dollar-value LIFO method of determining inventory costs for financial and income tax reporting on January 1, 2016. Webster continues to use the FIFO method for internal decision-making purposes. Webster’s FIFO inventories at December 31, 2016, 2017, and 2018, were $300,000, $412,500, and $585,000, respectively. Internally generated cost indexes are used to convert FIFO inventory amounts to dollarvalue LIFO amounts. Webster estimated these indexes as follows: 2016 1.00 2017 1.25 2018 1.50 Required: 1. Determine Webster’s dollar-value LIFO inventory at December 31, 2017 and 2018. 2. Describe how the change should have been reported in Webster’s 2016 financial statements.
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