Introduction: Inventory includes raw materials, work-in-process goods and finished products, which are held with the purpose of sale.
Given: A Co. is considering switching from the specific-goods LIFO approach to the dollar-value LIFO approach. Because the financial personnel at A know very little about dollar-value LIFO, they ask you to answer the following questions.
(a)
To explain: To explain the LIFO pool.
(b)
To explain: Is it possible to use a LIFO pool concept and not use dollar-value LIFO?
(c)
To define: What is LIFO liquidation?
(d)
To explain: How are price indexes used in the dollar-value LIFO method?
(e)
To explain: What are the advantages of dollar-value LIFO over specific-goods LIFO?
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