Dollar Value Lifo

Dollar Value Lifo

Dollar Value Lifo means:
an inventory method computed in dollars (i.e., cost figures) rather than units. After inventory is divided into homogeneous groupings or “pools,” each pool is converted to base-year prices by means of appropriate price indices. The difference between beginning and ending balances, as converted, becomes a measure of change in inventory quantity for the year. An increase is recognized as an inventory layer to be added to the beginning inventory. It is converted at the current price index and added to the dollars identified with the beginning balance. The Tax Reform Act of 1986 allows a simplified dollar-value last in, first out method for taxpayers having average annual gross receipts for the 3 preceding years of $5 million or less.


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