dollar_value_LIFO_solution

dollar_value_LIFO_solution - Dollar‐Value LIFO ‐...

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Unformatted text preview: Dollar‐Value LIFO ‐ Solution 2006 January 1 500,000 (DVL base) Inventory 1.00 Index Ending inventory at base‐year costs (556,500/1.05) Less: Beginning inventory Layer added in 2006 Converted to acquisition‐year costs Ending inventory = Beginning inventory at DVL Add: 2006 layer at current costs Ending inventory at DVL cost 2007 January 1 531,500 (at DVL cost) Inventory 530,000 (at base‐year costs) 1.05 Index Ending inventory at base‐year costs (596,200/1.10) Less: Beginning inventory at base‐year costs Layer added in 2007 Converted to acquisition‐year costs Ending inventory = Beginning inventory at DVL cost Add: 2007 layer at current cost Ending inventory at DVL cost December 31 596,200 1.10 542,000 (530,000) 12,000 X 1.10 13,200 531,500 13,200 544,700 December 31 556,500 1.05 530,000 (500,000) 30,000 X 1.05 31,500 500,000 31,500 531,500 2008 January 1 544,700 (at DVL cost) Inventory 542,000 (at base‐year costs) 1.10 Index Ending inventory at base‐year costs (612,250/1.15) Less: Beginning inventory at base‐year costs Layer subtracted in 2007 all from 2007 layer Net 2007 layer (12,000 – 7,000) Converted to acquisition‐year costs (using 2007 index) Ending inventory = Beginning inventory at DVL cost (2006 and 2007 layers only) Add: Remaining 2007 layer at current cost Ending inventory at DVL cost 2009 January 1 537,000 (at DVL cost) Inventory 535,000 (at base‐year costs) 1.15 Index Ending inventory at base‐year costs (720,000/1.25) Less: Beginning inventory at base‐year costs Layer added in 2009 Converted to acquisition‐year costs Ending inventory = Beginning inventory at DVL cost Add: 2009 layer at current cost Ending inventory at DVL cost December 31 720,000 1.25 542,000 (535,000) 41,000 X 1.25 51,250 537,000 51,250 588,250 December 31 615,250 1.15 535,000 (542,000) (7,000) 5,000 X 1.10 5,500 531,500 5,500 537,000 ...
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This note was uploaded on 03/04/2010 for the course TAX 6845 taught by Professor Kelliher,c during the Fall '08 term at University of Central Florida.

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