The dollar value LIFO method is another approach used for inventory valuation‚ it follows the last in first out but take into consideration the impact of inflation. The dollar value LIFO method is derived from the LIFO method and it’s designed to overcome the main problem of LIFO method which is liquidation. The dollar value LIFO method groups all type of goods in the inventory in a pool and the pool is measured by the total dollar amount instead of physical quantity. The balance sheet view differ
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accounting is 3 basic inventory techniques or cost flow assumptions: FIFO (stands for first-in‚ first-out)‚ LIFO (stands for last-in‚ first-out) and WAVG (stands for weighted – average). In this article‚ I just want to focus on FIFO and LIFO. Let’s review these concepts: FIFO means that the oldest inventory items are recorded as sold first but do not necessarily mean that the exact newest physical object has been tracked and sold. LIFO on the other hand means the exact opposite‚ the most recently
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Accounting Department Memorandum To: Executive Vice President From: Yvonne Dixon and Teammates Subject: Last In/First Out (LIFO) versus First In/First Out (FIFO) Date: February 13‚ 2012 Executive Vice President‚ Late last week our team had a team meeting to discuss LIFO versus FIFO methods of inventory for the Cost of Goods Sold (COGS) as to our company needs. This was a very lengthy and well communicated process for our team. I feel that we as a team have worked to give you the best
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entities to examine when attempting to understand inventory management systems. The type of inventory a company has determines the method they use. Retail companies use the retail inventory method as a base system. Last-in-First-Out (LIFO) and First-in-First-Out (FIFO) are the two systems that appear to be used more frequently. Other systems used are the Just in Time or JIT method and the Average Cost method. The following paragraphs will describe different companies and the type or types of inventory
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Merrimack Tractors and Mowers‚ Inc.: LIFO or FIFO? 1.- Study the financial information for reel mower units that James Colburn prepared for Rick Martino. (Assume that the reel mower units are typical of all classes of inventory at Merrimack). Prepare a pro-forma income statement assuming no changes in accounting policy for 2008‚ and assuming the company sells 10‚000 units each quarter at a price of 2‚000 per unit with Sales General and Administration costs the same as for 2007. Sales Quarter Units
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3217 DECEMBER 9‚ 2008 WILLIAM E. BRUNS SHARON M. BRUNS SUSAN HARMELING Merrimack Tractors and Mowers‚ Inc.: LIFO or FIFO? Ricardo “Rick” Martino‚ president and chief operating officer of Merrimack Tractors and Mowers‚ Inc.‚ of Nashua‚ New Hampshire‚ felt that his job had grown much more complicated during 2007 and 2008. Merrimack was a major regional manufacturer and seller of large commercial grass mowers based on a design developed by his grandfather in the years after World War II
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other inventory systems such as FIFO and LIFO. FIFO means‚ first-in-first out. The primary purpose of FIFO inventory management practice in retail stores is to rotate stock so that it remains fresh‚ new‚ and in good condition for the consumer. This practice reduces returns and inventory write downs Conversely‚ LIFO means last in first out.In terms of how a company reports their financials‚ LIFO and FIFO have different advantages and disadvantages. For instance‚ with FIFO‚ as long as a company ’s good
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Regulating Inventory – An Examination of AASB 102 “Inventories” Inventories are in essence what organisations hold with an intention to sell‚ however directly or indirectly. For most businesses‚ this is how their profits are made‚ and it is reasonable to assume that these items account for much of an organisation’s activities. Such a big influence on indicators of financial performance and position warrants an equally large need for regulation to ensure that users of the financial statements are
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receivables‚ inventory‚ and PP&E. From the discussions in Nuware’s notes and the comparison with RP.Stuart’s financial statement‚ we noticed that there are several different accounting policies being adopted‚ including receivables‚ inventory‚ advertisement cost and PP&E. Moreover‚ it seems that Nuware is using gains on investment to manipulate total income. Therefore‚ we made some adjustment to make the comparison between Nuware and R.P Stuart more reliable. For instance‚ we assumed the same reserve/receivable
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Nash-Finch use to account for its inventory? Where did you find this information? If Nash-Finch uses LIFO for some or all of its inventories‚ what do you think motivated management to select this method? Under the inventories footnotes‚ below the financial statements (page 46)‚ Nash-Finch says that 79% of their inventories are valued with LIFO. The additional 21% is calculated using FIFO. By using LIFO‚ Nash-Finch is able to report lower holding inventories by $90.7 million for 2012. Being able to
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