Olson Company adopted the dollar-value LIFO method for inventory valuation at th

Question

Olson Company adopted the dollar-value LIFO method for inventory valuation at the beginning of 2015. The following information about the inventory at the end of each year is available from Olson's records:

Required:

1. Calculate the dollar-value LIFO inventory at the end of each year. Do not round your intermediate calculations. Round final answers to the nearest dollar.

$

2. Prepare the appropriate disclosures for the 2018 annual report if Olson uses current cost internally and LIFO for financial reporting. Round final answers to the nearest dollar.

Year Current Costs Index 2014 $50,000 100 2015 60,000 108 2016 70,000 115 2017 73,000 125 2018 78,000 135

Explanation / Answer

Solution 1:

Solution 2:

Computation of inventory at base year prices and change from prior year - Olson Company Year Inventory at end of year prices Price index Inventory at base year prices Change from Prior Years 2014 $50,000.00 100 $50,000 $0 2015 $60,000.00 108 $55,556 $5,556 2016 $70,000.00 115 $60,870 $5,314 2017 $73,000.00 125 $58,400 -$2,470 2018 $78,000.00 135 $57,778 -$622

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