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Sagot :
a. Value of Inventory in 2022 Balance sheet (DV LIFO) = $ 110, 000
b. LIFO inventory at the end of 2022 (Dollar value) = $ 111,180 and COGS increases.
c. Value of Inventory in 2023 Balance sheet (DV LIFO) = $ 115, 000
How to calculate value of inventory under DV LIFO?
a. Ending inventory at Base-year-prices (2022)
= Year Ending Inventory / Cost index
= 116600 / 1.06 = $ 110, 000
b. The increase in the real-dollar value of the inventory will be:
= 2022 Ending inventory - 2021 Ending inventory
= 110,000 – 107,000
= $ 3, 000
Therefore, the actual value of increase in the real-dollar value of the inventory (2022) at base-year-prices is:
= the real-dollar quantity increase in the inventory x Cost index
= $ 3, 000 x 1.06
= $ 3, 180
Then, at the end of year 2022, the total inventory would be:
= Base inventory (2021) + the real-dollar value increase in 2022
= $ 110, 000 + $ 3, 180 = $ 111,180
Therefore, the LIFO inventory at the end of 2022 (Dollar value) = $ 111,180
c. Ending inventory at Base-year-prices (2023)
= Year Ending Inventory / Cost index
= 128,800 / 1.12 = $ 115, 000
What is the difference between LIFO and FIFO?
The Last-In, First-Out (LIFO) approach is based on the assumption that the most recent or most recent unit to enter inventory gets sold first. According to the First-In, First-Out (FIFO) technique, the oldest inventory item will be the first to sell.
The dollar-value technique of valuing LIFO (DV LIFO) inventory involves using "base-year" costs stated in total dollars as the unit of measurement rather than the amount and price of particular commodities.
To know more about DV LIFO, check out:
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