Exam 9: Inventories

The Shill Company uses the dollar-value LIFO method for valuing inventory. The following inventory information is available at the end of the year: Year Year-End Price Price Index 1 \ 200,000 100 2 250,000 105 3 296,000 108 4 286,000 110 -The inventory at the end of Year 2 under dollar-value LIFO is

The LIFO reserve disclosure was intended to remedy the difficulty investors face when trying to compare LIFO versus FIFO firms in a meaningful manner.

The Bravo Company manufactures a single product.On December 31,2012 Bravo adopted the dollar-value LIFO inventory method.The inventory on that date using the dollar-value LIFO inventory method was determined to be $500,000.Inventory data for succeeding years are as follows: Year Ended December 31 Inventory at Respective Year-end Prices Relevant Price Index (Base Year 2012) 2012 \ 500,000 1.00 2013 527,000 1.08 2014 635,000 1.15 2015 645,000 1.21 Required: Compute the inventory amount at December 31,2013,2014,and 2015 using the dollar-value LIFO inventory method for each year.(Round all amounts to the nearest dollar.)

The use of perpetual inventory systems is preferred where a

Reported income for FIFO firms _________ includes some realized holding gains during periods of rising inventory costs.Which of the following terms (when inserted in the blank)makes the previous a true statement?

Under absorption costing all production costs are inventoried.

The following inventory valuation errors have been discovered for Jellison Corporation: • The 2013 year-end inventory was overstated by $19,000. • The 2014 year-end inventory was overstated by $46,000. • The 2015 year-end inventory was understated by $22,000. Jellison's reported income before income taxes in these years was as follows: Year Income Before Taxes 2013 \ 175,000 2014 208,000 2015 191,000 Determine what income before taxes for 2013,2014,2015 should have been after correcting for the errors.

The LIFO conformity rule states that

When physical inventory levels are decreasing,absorption cost income tends to rise since fixed overhead that was previously in inventory gets charged against income as part of the cost of goods sold.

A recent survey of companies indicated that the specific identification method of inventory accounting is the most prevalent.

Under a perpetual inventory system,purchases are debited to a purchases account.

When inventory increases under absorption costing it absorbs more fixed cost and increases net income.

IFRS permits inventory reductions due to lower of cost or market write-downs to be reversed if the market recovers.

Product costs,i.e.raw material,labor,and certain overhead items,are assigned to inventory and treated as assets until the inventory is sold.

The LIFO reserve disclosure is required because LIFO inventory costs are

The SEC requires that the 10-K report disclose the dollar impact of LIFO liquidation whenever it occurs.

The Shill Company uses the dollar-value LIFO method for valuing inventory. The following inventory information is available at the end of the year: Year Year-End Price Price Index 1 \ 200,000 100 2 250,000 105 3 296,000 108 4 286,000 110 -The inventory under dollar-value LIFO at the end of Year 4 is

The inventory accounts of a manufacturer would include all of the following accounts except

Variable costing is also referred to as

The FIFO method of inventory valuation assumes that the first unit purchased is the first unit sold.