Question

# Gross Corporation adopted the dollar-value LIFO method of inventory valuation on Dec 31, 2016. Its inventory...

Gross Corporation adopted the dollar-value LIFO method of inventory valuation on Dec 31, 2016. Its inventory at that date was \$1,101,000 and the relevant price index was 100. Information regarding inventory for subsequent years is as follows:

 Date Inventory at Current Prices Current Price Index December 31, 2017 \$1,272,000 106 December 31, 2018 \$1,443,000 125 Deceber 31, 2019 \$1,625,000 130

What is the cost of the ending inventory at December 31,2019 under dollar-value LIFO?

December 2016 = 1,101,000

December 2017

Base price value = 1,272,000/106*100 = 1,200,000

Net increase = 1,200,000 - 1,101,000 = 99,000

Valuation = 1,101,000*1 + 99,000*1.06 = 1,205,940

December 2018

Base price = 1,443,000/125*100 = 1,154,400

Net decrease = 1,200,000 - 1,154,400 = 45,600

Valuation = 1,101,000*1 + 53,400*1.06 = 1,157,604

December 2019

Base price = 1,625,000/130 = 1,250,000

Net increase = 1,250,000 - 1,154,400 = 95,600

Valuation = 1,101,000*1 + 53,400*1.06 + 95,600*1.30

= \$ 1,281,884

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