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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
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Explain the dollar-value LIFO method of inventory valuation.

To determine

Elaborate the valuation of inventory under dollar-value LIFO method.

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.

The valuation of inventory under dollar value LIFO method is elaborated as follows:

  • In the first method, the inventories are arranged in pools which are similar in nature.
  • After arranging the inventory in pool, the current cost for each pool of inventory at the end of the year is calculated...

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