Aber Company manufactures one product. On December 31, 2011, Aber adopted the do

Question

Aber Company manufactures one product. On December 31, 2011, Aber adopted the dollar-value LIFO inventory method. The inventory on that date using the dollar-value LIFO inventory method was $270,000. Inventory data are as follows:

                                         Inventory at                         Price index

            Year                year-end prices               (base year 2011)

            2012                     $378,000                                  1.05

            2013                        552,000                                  1.15

            2014                        575,000                                  1.25

      REQUIRED:

Compute the inventory at December 31, 2012, 2013, and 2014, using the dollar-value LIFO method for each year.

Explanation / Answer

Computation of dollar value inventory:

December 31, 2012: $ 270,000 + $ 90,000 x 1.05 = $ 364,500

December 31, 2013: $ 364,500 + $ 120,000 x 1.15 = $ 502,500

December 31, 2014: $ 364,500 + $ 100,000 x 1.15 = $ 479,500

Year Inventory at year-end prices Price index Inventory at base year prices Change from prior year 2011 $ 270,000 1 $270,000 0 2012 $ 378,000 1.05 $ 360,000 90,000 2013 $ 552,000 1.15 $ 480,000 120,000 2014 $ 575,000 1.25 $ 460,000 (20,000)

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