Suppose that David has elected to account for inventories and has adopted the last-in, first-out (LIFO) inventory-flow method for his business inventory of widgets (purchase prices below). Widget Number 1 Number 2 Number 3 $ 2,100 Purchase Date Direct Cost Other Costs Total Cost August 15 October 30 November 10 2,200 2,300 $ 100 150 100 $ 2,200 2,350 2,400 In late December, David sold one widget, and next year David expects to purchase three more widgets at the followi estimated prices:
Suppose that David has elected to account for inventories and has adopted the last-in, first-out (LIFO) inventory-flow method for his business inventory of widgets (purchase prices below). Widget Number 1 Number 2 Number 3 $ 2,100 Purchase Date Direct Cost Other Costs Total Cost August 15 October 30 November 10 2,200 2,300 $ 100 150 100 $ 2,200 2,350 2,400 In late December, David sold one widget, and next year David expects to purchase three more widgets at the followi estimated prices:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![[The following information applies to the questions displayed below.]
Suppose that David has elected to account for inventories and has adopted the last-in, first-out (LIFO) inventory-flow
method for his business inventory of widgets (purchase prices below).
Widget
Number 1
Purchase Date Direct Cost Other Costs Total Cost
August 15
$ 2,200
Number 2
October 30
2,350
Number 3 November 10
2,400
Widget
Purchase Date
Number 4 Early spring
Summer
Fall
In late December, David sold one widget, and next year David expects to purchase three more widgets at the following
estimated prices:
Number 5
Number 6
$ 2,100
2,200
2,300
David's §481 adjustment amount
Number of year(s)
Estimated
Cost
$ 2,600
2,260
2,400
$ 100
150
100
d. Suppose that David initially adopted the LIFO method, but wants to apply for a change to FIFO next year. What would be his §481
adjustment for this change, and over how many year(s) would he make the adjustment?
+
FIFO](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa998779b-f4c3-4984-ac41-c8fb668d4082%2Ff6282323-6ac7-4c0f-b5fa-0154df5b383f%2Fona3vgt_processed.png&w=3840&q=75)
Transcribed Image Text:[The following information applies to the questions displayed below.]
Suppose that David has elected to account for inventories and has adopted the last-in, first-out (LIFO) inventory-flow
method for his business inventory of widgets (purchase prices below).
Widget
Number 1
Purchase Date Direct Cost Other Costs Total Cost
August 15
$ 2,200
Number 2
October 30
2,350
Number 3 November 10
2,400
Widget
Purchase Date
Number 4 Early spring
Summer
Fall
In late December, David sold one widget, and next year David expects to purchase three more widgets at the following
estimated prices:
Number 5
Number 6
$ 2,100
2,200
2,300
David's §481 adjustment amount
Number of year(s)
Estimated
Cost
$ 2,600
2,260
2,400
$ 100
150
100
d. Suppose that David initially adopted the LIFO method, but wants to apply for a change to FIFO next year. What would be his §481
adjustment for this change, and over how many year(s) would he make the adjustment?
+
FIFO
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