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Worked-example setupScope and assumptions
- Cedar Trail Outfitters is fictional; the pool amounts and indexes are supplied for calculation practice only.
- The base-year layer is 100,000 at an index of 1.00, and the prior-year layer is 10,000 at an index of 1.04.
- The current-cost ending pool is 126,000, and the supplied current-year index is 1.05.
- The calculation proves the arithmetic under the supplied pool and indexes; it does not prove that either is appropriate.
- Period
- Current reporting year
- Units
- Whole currency units and index ratios
- Rounding
- Round displayed amounts to the nearest whole currency unit; retain full precision in the calculation.
Cedar Trail carries two layers before the current year. The base-year layer is 100,000 at an index of 1.00. A later layer is 10,000 in base-year dollars at an index of 1.04. The current-cost ending pool is 126,000, and the supplied index is 1.05.
Convert current cost to base-year cost
Divide 126,000 by 1.05. The checked base-year ending amount is 120,000. Existing layers contain 110,000 in base-year cost, so the real increase is 10,000. That increase becomes the current-year layer.
Price every layer at its own index
| Layer | Base-year cost | Layer index | Indexed cost |
|---|---|---|---|
| Base year | 100,000 | 1.00 | 100,000 |
| Prior year | 10,000 | 1.04 | 10,400 |
| Current year | 10,000 | 1.05 | 10,500 |
| Ending dollar-value LIFO inventory | 120,000 | 120,900 |
The checked schedule reports 120,900. The current-cost pool exceeds that amount by 5,100 because older layers retain their own indexes. Applying 1.05 to all 120,000 of base-year cost would erase the layer history.
Review what the calculation cannot prove
The arithmetic cannot show that the pool contains suitable goods, that the index matches those goods, or that the detailed records support the base year and prior layers. A reviewer ties those choices to the entity's method records and inventory data. ASC 330-10-30-9 supports the LIFO cost-flow setting; it does not approve Cedar Trail's supplied pool or index.
Verified calculation · dollar value lifo analysis
The curriculum loader recomputed this example before it entered the site build. Expand any structured input to inspect the stated facts.
- current price index
- 1.05
- ending inventory current cost
- 126,000
- prior layers
- 2 fields
Inspect data
{
"base_year": {
"base_year_cost": 100000,
"ordinal": 0,
"price_index": 1
},
"prior_year": {
"base_year_cost": 10000,
"ordinal": 1,
"price_index": 1.04
}
}- reported ending inventory
- 120,900
Recomputed result
| Measure | Value |
|---|---|
| base year cost change | 10,000 |
| base year ending indexed cost | 100,000 |
| current cost excess over dollar value lifo | 5,100 |
| ending base year cost | 120,000 |
| ending dollar value lifo inventory | 120,900 |
| liquidated base year cost | 0 |
| new layer base year cost | 10,000 |
| prior base year cost | 110,000 |
| prior year ending indexed cost | 10,400 |