25. Maduk Oil started operating on Jan. 1st 2018 and uses the dollar value LIFO method....
25. Maduk Oil started operating on Jan. 1st 2018 and uses the dollar value LIFO method. The price index for oil was 1.0 in Dec. 31st 2018, and 1.1 in Dec. 31st 2019. The production manager provided the following inventory valuation for oil valued at year-end prices:
Dec. 31st 2018: $100,000 (valued at Dec. 31st 2018 prices)
Dec. 31st 2019: $150,000 (valued at Dec. 31st 2019 prices)
At what value should Maduk report the value of its year-end inventory on Dec. 31st 2019 in its balance sheet? (round to nearest dollar)
| A. |
$100,000. |
|
| B. |
$140,000. |
|
| C. |
$150,000. |
|
| D. |
None of the above. |
Homework Answers
Answer: B. $140,000
| Year Ended 12/31 | Inventory Layers Converted to Base Year Cost | Inventory Layers Converted to Cost | EI at DVL Cost | |||||||||
| EI at Year-End Costs | Year-End Price Index | EI at Base-Year Costs | EI at Base-Year Costs | Year-End Cost Index | = | Inventory Layers Converted to Cost | ||||||
| 2018 | 100000 | ÷ | 1.0 | = | 100000 | Base | 100000 | x | 1.0 | = | 100000 | 100000 |
| 2019 | 150000 | ÷ | 1.1 | = | 136364 | Base | 100000 | x | 1.0 | = | 100000 | |
| 2019 | 36364 | x | 1.1 | = | 40000 | 140000 | ||||||
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25. Maduk Oil started operating on Jan. 1st 2018 and uses the
dollar value LIFO method....
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