On January 1,2015,ECT Co

question 10

Essay

On January 1,2015,ECT Co.adopted the dollar-value LIFO method for its one inventory pool.The pool's value on this date was $600 million.The 2015 and 2016 ending inventory valued at year-end costs were $702 million and $840 million,respectively.The appropriate cost indexes are 1.08 for 2015 and 1.20 for 2016.
Required:
Calculate the inventory balance that ECT Co.would report on its year-end balance sheets for 2015 and 2016,using the dollar-value LIFO method.

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Definitions:

Profitability of Operations

An assessment of how efficiently a company generates profit from its core business activities, excluding peripheral activities.

EBIT

An indicator of company profit, Earnings Before Interest and Taxes, which omits the costs related to interest and taxes.

Trade Credit

A financing arrangement where a buyer is allowed to purchase goods or services and pay the supplier at a later scheduled date.

Immediate Payment

A payment that is required to be made at the time of purchase or transaction.