E8-21 (LO4) (Dollar-Value LIFO) The dollar-value LIFO method was adopted by Enya

Question

E8-21 (LO4) (Dollar-Value LIFO) The dollar-value LIFO method was adopted by Enya Corp. on January 1, 2017. Its inven- tory on that date was $160,000. On December 31, 2017, the inventory at prices existing on that date amounted to $140,000. The price level at January 1, 2017, was 100, and the price level at December 31, 2017, was 112. Instructions (a) Compute the amount of the inventory at December 31, 2017, under the dollar-value LIFO method. (b) On December 31, 2018, the inventory at prices existing on that date was $172,500, and the price level was 115. Compute the inventory on that date under the dollar-value LIFO method.

Explanation / Answer

a.

b.

12/31/2017 inventory at 01/01/2017 price ($140000 / 1.12) 125000 Inventory at 01/01/2017 160000 Inventory decrease at base price 35000 Inventory at December 31,2017 under the dollar value LIFO method (1250000 * 1) 125000

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