Question

Linguini Inc. adopted dollar-value LIFO (DVL) as of January 1, 2018, when it had an inventory of $841,000. Its inventory as of December 31, 2018, was $874,000 at year-end costs and the cost index was 1.15. What was DVL inventory on December 31, 2018

Answer 1

Answer:

760,000

Explanation:

First find ending inventory at base pricing:

$874,000/1.15 = 760,000

Calculate real dollar increase/decrease in quantity

760,000-841,000 = -81,000

Since it is a decrease in quantity, you use prior period cost index. Prior period is the base year so you just use 1.0 which means that -81,000 stays the same

so now it is 841,000-81,000=760,000