The dollar-value LIFO method was adopted by Enya Corp. on January 1, 2014. Its i

Question

The dollar-value LIFO method was adopted by Enya Corp. on January 1, 2014. Its inventory on that date was $173,640. On December 31, 2014, the inventory at prices existing on that date amounted to $159,040. The price level at January 1, 2014, was 100, and the price level at December 31, 2014, was 112.

On December 31, 2015, the inventory at prices existing on that date was $203,435, and the price level was 115. Compute the inventory on that date under the dollar-value LIFO method.

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Explanation / Answer

2015 inventory to 2013 base price = $203435 / 1.15 = $176,900

2014 inventory to 2013 base price = $159.040 / 1.12 = $142,000

Current year LIFO layer = $176,900 - $142,000 = $34,900

LIFO layer at end of 2015 prices = $142,000 * 1.00 + $34,900 * 1.15 = $182,135

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