On January 1 2017 Eight Company adopted the dollarvalue LIFO

On January 1, 2017, Eight Company adopted the dollar-value LIFO method of computing inventory. The inventory value of the company\'s one inventory pool on that date was $400,000. Inventory at year-end costs on December 31, 2017 and 2018 was $441,000 and $487,200, respectively. The cost indexes were 1.05 in 2017 and 1.12 in 2018.

What amount would Eight Company report for inventory on the balance sheet as of December 31, 2017?

Solution

Adjust 2017 Inventory to 2016 base prices

441000/1.05 = $420000

Current year LIFO = 420000-400000 = $20000

Eight Company report for inventory on the balance sheet as of December 31, 2017 = 400000*1.00+20000*1.05 = $421000