Exercise 8-24 The dollar-value LIFO method was adopted by Enya Corp. on January

Question

Exercise 8-24

The dollar-value LIFO method was adopted by Enya Corp. on January 1, 2014. Its inventory on that date was $297,040. On December 31, 2014, the inventory at prices existing on that date amounted to $282,240. The price level at January 1, 2014, was 100, and the price level at December 31, 2014, was 112.

Exercise 8-24

The dollar-value LIFO method was adopted by Enya Corp. on January 1, 2014. Its inventory on that date was $297,040. On December 31, 2014, the inventory at prices existing on that date amounted to $282,240. The price level at January 1, 2014, was 100, and the price level at December 31, 2014, was 112.

Explanation / Answer

Adjust Dec- 2014 inventory to Jan-14 prices: $ 282240 *100/ 112 = $ 252000 Amount of Inventory at the end of Dec-14 period $ 252000*100 = $ 252000 Amount of Inventory at the end of Dec-15 period $ 331200/115*100 = $ 288000 LIFO layer at Dec-14 $ 252000- $ 282240 = $ 30240 LIFO layer at Dec-15 $ 288000- $ 331200 = $ 43200

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