Arna, Inc. uses the dollar-value LIFO method to value inventory over 3 years from 2013 to 2015. The company's inventory costs and price indices are provided. To calculate the inventory value for 2014 and 2015 using dollar-value LIFO, the ending inventory costs are deflated by the price indices, resulting in a 2014 value of $19,800 and 2015 value of $22,500.

1. Arna, Inc. uses the dollar-value LIFO method of computing its inventory. Data for the past 3
years follow.
Year Ended
December 31
Inventory at
Current-Year Cost
Price
Index
Compute the value of the 2014 and 2015 inventories using the dollar-value LIFO method.
Year Ended
December 31
Inventory at
Current-Year Cost
Price
Index
2013 $19,300 100
2014 20,988 106
2015 25,875 115
Solution
inventory value in 2014= 20,988/1.06= $19,800
inventory value in 2015= 25,875/1.15= $22,500