Dollar Value LIFO Inventory Method
Jennifer Inc. adopted dollar value LIFO on December 31,2005.Data for 2005–2008 follows:
Inventory and index on the adoption date, December 31, 2005:
|
Dollar value LIFO inventory |
$250,000 |
|
Price index at year end (the base year) |
100 |
Inventory information in succeeding years:
|
|
Inventory at |
Year End |
Average |
|
Date |
Year End Prices |
Price Index |
Price Index |
|
Dec 31, 2006 |
$314,720 |
1.12 |
1.04 |
|
Dec 31, 2007 |
361,800 |
1.20 |
1.14 |
|
Dec 31, 2008 |
353,822 |
1.27 |
1.20 |
1. Compute the inventory value at December 31 of each year under the dollar value method, assuming new layers are valued using the average price index.
2. Compute the inventory value at December 31, 2008, assuming that dollar value procedures were adopted at December 31, 2006, rather than in 2005. The beginning layer is the December 31, 2006, balance.