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dv lifo: green company uses fifo in its internal inventory accounts. at year end, it converts the fifo results to dv lifo. the company adopted lifo on december 31, 2021 with a base inventory of $107,000. the following table summarizes data available through december 31, 2024. inventory at year end cost cost index 2022 ending inventory $116,600 1.06 2023 ending inventory $128,800 1.12 2024 ending inventory $129,950 1.15 a. what amount would green report as the value of inventory under dv lifo on its 2022 balance sheet? b. what is the effect of the conversion to dv lifo on 2022 cogs? indicate below if cogs increases, decreases, or does not change as a result of the conversion from fifo to dv lifo and then indicate the dollar amount (if any). c. what amount would green report as the value of inventory under dv lifo on its 2023 balance sheet?

Sagot :

tutorconsortium624

a. Value of Inventory in 2022 Balance sheet (DV LIFO) = $ 110, 000

b. LIFO inventory at the end of 2022 (Dollar value) = $ 111,180 and COGS increases.

c. Value of Inventory in 2023 Balance sheet (DV LIFO) = $ 115, 000

How to calculate value of inventory under DV LIFO?

a. Ending inventory at Base-year-prices (2022)

= Year Ending Inventory / Cost index

= 116600 / 1.06 = $ 110, 000

b. The increase in the real-dollar value of the inventory will be:

= 2022 Ending inventory  - 2021 Ending inventory

= 110,000 – 107,000

= $ 3, 000

Therefore, the actual value of increase in the real-dollar value of the inventory (2022) at base-year-prices is:

= the real-dollar quantity increase in the inventory x Cost index

= $ 3, 000 x 1.06

= $ 3, 180

Then, at the end of year 2022, the total inventory would be:

= Base inventory (2021) + the real-dollar value increase in 2022

= $ 110, 000 + $ 3, 180 = $ 111,180

Therefore, the LIFO inventory at the end of 2022 (Dollar value) = $ 111,180

c. Ending inventory at Base-year-prices (2023)

= Year Ending Inventory / Cost index

= 128,800 / 1.12 = $ 115, 000

What is the difference between LIFO and FIFO?

The Last-In, First-Out (LIFO) approach is based on the assumption that the most recent or most recent unit to enter inventory gets sold first. According to the First-In, First-Out (FIFO) technique, the oldest inventory item will be the first to sell.

The dollar-value technique of valuing LIFO (DV LIFO) inventory involves using "base-year" costs stated in total dollars as the unit of measurement rather than the amount and price of particular commodities.

To know more about DV LIFO, check out:

brainly.com/question/24131469

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