Dollar Value LIFO III (Example)
Year 1 |
Index |
||||
Beginning inventory |
$200.0 |
100 |
|||
Purchases |
$2,200.0 |
||||
total goods available for sale |
$2,400.0 |
||||
ending inventory at current cost (per count) |
$330.0 |
110 |
|||
ending inventory at base cost: 330/110*100 |
$351.0 |
||||
less beginning inventory at base cost |
-$200.0 |
||||
increase at base cost |
$100.0 |
||||
increase at current cost: 100*110/100 |
$110.0 |
||||
$ value LIFO ending inventory: |
increase |
$110.0 |
|||
beginning inventory |
$200.0 |
||||
$310.0 |
|||||
cost of goods sold: |
$2,090.0 |
||||
| Example continued: | |||||
Year 2 |
2 layers: index 100, index 110 |
||||
Beginning inventory (dollar value LIFO) |
$310.0 |
||||
Purchases |
$3,000.0 |
||||
total goods available for sale |
$3,310.0 |
||||
ending inventory at current cost (per count) |
$400.0 |
115 |
|||
ending inventory at base cost: 400/115*100 |
$347.8 |
||||
less beginning inventory at base cost |
-$351.0 |
||||
increase at base cost |
$47.8 |
||||
increase at current cost: 100*110/100 |
48*115/100 |
$55.0 |
|||
$ value LIFO ending inventory: |
increase |
$55.0 |
|||
beginning inventory |
$310.0 |
||||
$365.0 |
|||||
cost of goods sold: |
$2,945.0 |
||||
Example continued: |
|||||
Year 3 |
3 layers: index 100, index 110 and 115 |
||||
Beginning inventory (dollar value LIFO) |
$365.0 |
||||
Purchases |
$3,351.0 |
||||
total goods available for sale |
$3,665.0 |
||||
ending inventory at current cost (per count) |
$400.0 |
120 |
|||
ending inventory at base cost: 400/115*100 |
400/120*100 |
$333.3 |
|||
less beginning inventory at base cost |
-$347.8 |
||||
decrease at base cost |
-$14.5 |
||||
decrease at current cost: 67*115/100 |
14*115/100 |
-$16.7 |
|||
$ value LIFO ending inventory: |
increase |
-$16.7 |
|||
beginning inventory |
$365.0 |
||||
$ value LIFO ending inventory: |
$348.3 |
||||
cost of goods sold: |
3316.667 |
||||
Alternative calculation: |
|||||
ending inventory at base cost: 400/115*100 |
400/120*100 |
$333.3 |
|||
layer at index 115: |
$33.0 |
$38.3 |
|||
layers at 100 and 110 |
$310.0 |
||||
$ value LIFO ending inventory: |
$348.3 |
||||
Note that because of the reduction, there will never be a layer at index 120: |
|||||
Year 4 |
3 layers: index 100, index 110 and 115 |
||||
Beginning inventory (dollar value LIFO) |
$348.3 |
||||
Purchases |
$3,800.0 |
||||
total goods available for sale |
$4,148.3 |
||||
ending inventory at current cost (per count) |
$600.0 |
125 |
|||
ending inventory at base cost: 400/115*100 |
600/125*100 |
$480.0 |
|||
less beginning inventory at base cost |
-$333.3 |
||||
increase at base cost |
$146.7 |
||||
increase at current cost: 146.7*125/100 |
14*115/100 |
$183.3 |
|||
$ value LIFO ending inventory: |
increase |
$183.3 |
|||
beginning inventory |
$348.3 |
||||
$ value LIFO ending inventory: |
$531.7 |
||||
cost of goods sold: |
3616.667 |
||||
The ending inventory in year 4 consists of the folowing layers: |
|||||
base |
current |
||||
base layer |
$200.0 |
$200.0 |
100 |
||
year 1 |
$100.0 |
$110.0 |
110 |
||
year 2 |
$33.0 |
$38.3 |
115 |
||
year 4 |
$146.7 |
$183.3 |
125 |
||
$479.7 |
$531.7 |
||||
for more fun go to dollar value retail LIFO!
