Joined: 04 Dec 2008 Location: United States
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Posted: 26 Nov 2009 at 01:10 | IP Logged
On January 1, 1996, West Co. adopted the dollar-value LIFO inventory method. Inventory data for 1996 and 1997 are as follows:
Date
Inventory Current Year Cost
Relevant Price Index
1/1/96
$250,000
1
12/31/96
$278,250
1.05
12/31/97
$364,000
1.12
West's dollar-value LIFO inventory at December 31, 1997 is
Answer: $332,950
Can someone explain how to do the Dollar Value LIFO? I just don't seem to get it. I've tried to read Becker's appendix, and worked a few problems. But don't get it.
__________________ B:85
A:90
R:92
F:90
My inspiration: "O mankind! We have created you male & female, & have made you nations & tribes that ye may know one another. The noblest of you is the best in conduct."-Quran
Joined: 28 May 2009 Location: United States
Online Status: Offline Posts: 112
Posted: 26 Nov 2009 at 01:50 | IP Logged
Just remember
1) Price Index is calculated using year end amount
2) Price Index = Ending Inventory Under Cost/Ending Inventory Under Base
(If I ever get confused, I just remember that the ratio must be greater than
1)
3) Layer for LIFO are calculated as the price index multiplied by the layer
under the base year cost.
Joined: 04 Dec 2008 Location: United States
Online Status: Offline Posts: 504
Posted: 26 Nov 2009 at 12:25 | IP Logged
Ahha...This all makes so much more sense now! Thanks much and good luck on Monday :)
__________________ B:85
A:90
R:92
F:90
My inspiration: "O mankind! We have created you male & female, & have made you nations & tribes that ye may know one another. The noblest of you is the best in conduct."-Quran
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Topic: Dollar Value LIFO
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