Dollar-value LIFO:
A)Starts with ending inventory measured at current costs and re-creates LIFO layers for measuring inventory costs.
B)Increases the recordkeeping costs of LIFO.
C)Only is allowed for internal reporting purposes.
D)None of the above is correct.

Question

Quizplus · Accepted Answer

Dollar-value LIFO re-creates LIFO layers for measuring inventory costs but starts with ending inventory measured at current costs. This method allows for a more accurate measurement of inventory costs and can result in tax benefits. Option B is incorrect because Dollar-value LIFO can actually decrease recordkeeping costs by reducing the need for physical inventory counts. Option C is incorrect because Dollar-value LIFO is allowed for external financial reporting purposes as well.

Dollar-Value LIFO