Ch8 Part3 - ACIS 3115 Chapter 8 Part 3 Inventories...

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ACIS 3115 Chapter 8 Part 3 Inventories: Measurement
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8-2 Methods of Simplifying LIFO Use of Inventory pools Pool – groups of items that are physically similar or economically similar Makes recordkeeping easier – account for pools instead of every specific type of inventory Reduces risk of LIFO liquidation - reduction of one quantity in a pool may be offset by an increase in another.
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8-3 Methods of Simplifying LIFO Dollar-Value LIFO (DVL) Uses inventory pools Pools are viewed as layers of value, rather than layers of similar units At the end of the period we determine if a new inventory layer was added by comparing ending inventory dollar amount to beginning inventory dollar amount.
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8-4 Dollar-Value LIFO (DVL) Goal of dollar-value LIFO is to determine if an increase in ending inventory over beginning inventory is due to a cost increase or an increase in the quantity of units.
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