Final answer:
Dollar value LIFO deals with index numbers or LIFO indexes, which are used to convert the cost of the current year's inventory to base year costs in constant dollars.
Step-by-step explanation:
Dollar value LIFO, which stands for Last-In, First-Out, handles numbers that are related to the cost of inventory calculated using index numbers. These numbers are sometimes referred to as price indexes or LIFO indexes. They are used to adjust for inflations and thus provide a way to compare costs in constant dollars.
Essentially, these index numbers represent the ratio of current year prices to base year prices and are used to convert ending inventory at current cost to ending inventory at base cost. The forms these numbers can take vary; they might be simple percentages or more complex figures.
It's important to note that when creating financial statements, accountants must ensure these numbers are clear and not misleading, given that index numbers can result in messy-looking numbers like $17,147.51 or $27,654.92 when real-life product prices are taken into account.