Intermediate Accounting (2nd Edition)
2nd Edition
ISBN: 9780134730370
Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Publisher: PEARSON
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Chapter 10, Problem 10.4P
Dollar-Value LIFO. The Happenings Company adopted the dollar-value LIFO inventory method on December 31, 2017, when the price index was 1.00. Ending inventory on the date that it adopted dollar-value LIFO follows.
| Item | Number of Units | Total FIFO Cost |
| MAS1840 | 280 | $ 840 |
| JAS2307 | 850 | 5,950 |
| TOTAL | $6,790 |
Information related to the year-end prices for the two years after the adoption of dollar-value LIFO is summarized in the following table.
| December 31 | ||
| Description | 2018 | 2019 |
| Year-end prices (FIFO) - MAS1840 inventory | S 2,100 | S 2,639 |
| Year-end prices (FIFO) - JAS2307 inventory | 10,030 | 16,800 |
The cumulative price index for 2018 is 1.3385, and the cumulative price index for 2019 is 1.4399. Treat both models as one group.
Required
- a. Calculate the ending inventory for 2018 at dollar-value LIFO and determine the LIFO reserve needed if any. Prepare the
journal entry to record the LIFO reserve. - b. Calculate the ending inventory for 2019 at dollar-value LIFO and determine the LIFO reserve needed if any. Prepare the journal entry to record the LIFO reserve.
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A company adopted the dollar-value LIFO inventory method on January 1, 2024. In applying the LIFO method, the company uses internal cost indexes and the multiple-pools approach. The following data were available for Inventory Pool No. 3 for the two years following the adoption of LIFO:
Year
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Cost Index
At Year-End
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1/1/2024
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$ 303,500
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12/31/2024
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325,000
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12/31/2025
435,540
357,000
1.22
Under the dollar-value LIFO method, the inventory on December 31, 2025, should be?
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January 1, 2025 (using internal price indexes and multiple
pools). The following data are available for inventory pool A
for the 2 years following adoption of LIFO.
At Base-Year At Current-Year
Inventory
Cost
Cost
1/1/25
$190,700
$190,700
12/31/25
251,800
276,980
12/31/26
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286,832
Computing an internal price index and using the dollar-value
LIFO method, at what amount should the inventory be
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Chapter 10 Solutions
Intermediate Accounting (2nd Edition)
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