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Goal of dollar value lifo is to determine if an

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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. Cost Index for the year. Cost Index for the year. Cost index in layer year = Cost in layer year ÷ Cost in base year
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8-5 Example: The following information relates to the Burg Company. Use the dollar-value LIFO method to compute the ending inventory for 2009 through 2012. Dollar-Value LIFO Date Ending Inventory (End-of-Year Costs) Cost Index December 31, 2009 $70,000 1.00 December 31, 2010 88,200 1.05 December 31, 2011 95,120 1.16 December 31, 2012 108,000 1.20
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8-6 Inventory at Inventory at Convert to Inventory End-of-Year Base-Year Base Acquisition at LIFO Year Cost Index Cost Layers Index Year Cost DVL Cost Reserve 2009 70,000 $ 1.00 70,000 $ 70,000 $ 1.00 70,000 $ 70,000 $ - $ 2010 88,200 1.05 84,000 70,000 1.00 70,000 14,000 1.05 14,700 84,700 3,500 2011 95,120 1.16 82,000 70,000 1.00 70,000 12,000 1.05 12,600 82,600 12,520 Dec. 31 Dec. 31 Dec. 31 Balance Sheet 2009 2010 2011 Inventory 70,000 $ 88,200 $ 95,120 $ LIFO Reserve - (3,500) (12,520) 70,000 $ 84,700 $ 82,600 $ Journal entry Cost of goods sold 3,500 9,020 LIFO Reserve (3,500) (9,020) Dollar-Value LIFO
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8-7 Inventory at Inventory at Convert to Inventory End-of-Year Base-Year Base Acquisition at DVL LIFO Year Cost Index Cost Layers Index Year Cost Cost
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