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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem

Dollar-Value LIFO Kwestel Company adopted the dollar-value LIFO method for inventory valuation at the beginning of 2015. The following information about the inventory at the end of each year is available from Kwestel’s records:

Chapter 7, Problem 12P, Dollar-Value LIFO Kwestel Company adopted the dollar-value LIFO method for inventory valuation at

Required:

Calculate the dollar-value LIFO inventory at the end of each year. Round to the nearest dollar.

To determine

Using the dollar value LIFO method compute the ending inventory for all the years.

Explanation

Dollar-value LIFO method: In this method, the valuation of inventory is calculated on the monetary value of units instead of quantity of units held. The dollar value LIFO method uses the cost indexes to convert the current cost of inventory to the base year cost.

Compute the ending inventory for all the years:

Table (1)

DateInventory at Base year costsIncrease/ decrease at base year costRelevant costBase year costIncrease/ decrease at relevant current cost
2017$ 8,000 - - 
2018$ 9,000 $1,000108100$1,200
2019$ 8,846($154)115100 ($185)
2020$ 9,655 $809145100 $1,173
2021$ 8,400($809)1

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