The following steps are adopted in the dollar value LIFO method: Base year value is determined. Inflation index is measured with reference to this year. Ending inventory is computed as per base year value and inflation or price index is applied. The values in the above steps are compared and the increase or decrease in value is calculated. The values are reinstated as per current year prices after determining the change in values. Ending inventory value is computed by adding the values of layers. Given Information: M Company had ending inventory, at end-of-year prices, of $100,000 on December 31, 2016; $119,900 on December 31, 2017; and $134,560 on December 31, 2018. The year-end price indexes were 100 on December 31, 2016, 110 on December 31, 2017, and 116 on December 31, 2018. To compute: The ending inventory for M Company for 2016 through 2018 using the dollar-value LIFO method.

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Chapter 8, Problem 8BE

To determine

Introduction: The following steps are adopted in the dollar value LIFO method:

Base year value is determined. Inflation index is measured with reference to this year.

Ending inventory is computed as per base year value and inflation or price index is applied.

The values in the above steps are compared and the increase or decrease in value is calculated.

The values are reinstated as per current year prices after determining the change in values.

Ending inventory value is computed by adding the values of layers.

Given Information: M Company had ending inventory, at end-of-year prices, of $100,000 on December 31, 2016; $119,900 on December 31, 2017; and $134,560 on December 31, 2018. The year-end price indexes were 100 on December 31, 2016, 110 on December 31, 2017, and 116 on December 31, 2018.

To compute: The ending inventory for M Company for 2016 through 2018 using the dollar-value LIFO method.

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