Inventory Valuation 1 Lewis Corporation Case: 6-2 Page: 173 2 Lewis Corporation Traditionally used inventory valuation method: FIFO Uses periodic inventory system 3 Inventory Transaction 2005-2007 No. of Cartons Price per Carton 2005 2006 2007 2005 2006 2007 Beginning balance 1840 1020 1040 $20.00 Purchases 600 700 1000 $20.25 $21.50 $22.50 800 700 700 $21.00 $21.50 $22.75 400 700 700 $21.25 $22.00 $23.00 200 1000 700 $21.50 $22.25 $23.50 Sales 2820 3080 2950 $34
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Rate is 35%. To restate Year 2006 LIFO inventories to a FIFO basis‚ we use the following analytical entry: A. Option A B. Option B C. Option C D. Option D The following information can be found in ABC Co.’s financial statements. Assume a tax rate of 35%. Inventories valued using the LIFO method represented approximately 80% of consolidated inventories. 6. What will be the value of inventory for 2006 if ABC used FIFO valuation? A. 633‚485 B. 570‚430 C. 633‚381 D. 488‚581
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re-establishing manufacturing operations in Nashua. Thus‚ the company controller suggested a change in the accounting process from LIFO to FIFO system for inventory accounting. A change such as this would require additional disclosures in the notes of the financial statement. Need for Change The company has decided to change its inventory accounting method from LIFO to FIFO as this will increase the profit by reducing the Cost of Goods sold. As the inventory gets consumed‚ the 1|Page valuation will
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Two example of valuation methods of accounting principles that evaluate the value of inventory are the FIFO and LIFO method. There are several differences between FIFO and LIFO approach‚ so it can be two different balances for the same inventory depending on the valuation method. Therefore‚ a financial statement can be affected dramatically by switching form FIFO to LIFO. When switching from FIFO to LIFO‚ an entity needs to consider whether it is essential to restate its financial data for previous
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concerning her request for tax assistance. Roberta wants to know if she can use the specific identification method to calculate the recognized gain of her sale of Color Inc. stock. She received a letter from the IRS stating that she should have used the FIFO method. Therefore‚ Roberta is looking to find out which method is correct to clear this matter up with the IRS. Facts: In October 2016‚ Roberta instructed her stock broker to sell 6‚000 shares of Color‚ Inc.‚ with the highest cost basis. At the time
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weighted average method -FIFO-method “What’s the difference?” Process costing – methods of stock valuation 1. QUANTITY STATEMENT FIFO: Opening work in process (units) kept separate from units started and completed in the current period. WAM: All units completed and transferred out are treated identically (opening WIP and units started and completed are combined in the output column). Process costing – methods of stock valuation 2. PRODUCTION COST STATEMENT FIFO: Only uses current period
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counterproductive in 2009‚ as the prices continue to rise. What approach (FIFO or LIFO) and why would you recommend to Merrimack Mowers if inventory purchase prices and transportation costs had been stable of falling over the two-year period? (For example‚ if Merrimack were a computer assembly firm). Considering available options it can be seen that the business will become unviable right from 2008 onwards. Hence the company should move to FIFO method of accounting for inventory. This move though has to be
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entries‚ and the cost of production report. 2. Describe process costing for settings without work-in-process inventories. 3. Define equivalent units‚ and explain their role in process costing. 4. Prepare a departmental production report using the FIFO method. 5. Prepare a departmental production report using the weighted average method. 6. Prepare a departmental production report with transferred-in goods and changes in output measures. 7. Describe the basic features of operation costing. 8
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FIFO: FIFO (first in‚ first out) is the memory which is used as the slave in this project. Input is taken from the AXI-BUS as the data-input and the corresponding information or data is stored in the FIFO memory. ROM: ROM (Read only memory) is the memory which is used as the slave in this project. Input is taken from the AXI-BUS as the data-input and
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the first-in‚ first-out method (FIFO)‚ the first units purchased are assumed to be the first ones sold. True 9. False Companies are not allowed to report inventory costs by assuming which units of inventory are sold and which units still remain on hand. True 8. False If a company has ending inventory of $25‚000‚ purchases during the year of $95‚000‚ and beginning inventory of $30‚000‚ cost of goods sold equals $90‚000.
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