Final answer:
Dollar-value LIFO is a method of inventory valuation that adjusts the cost of inventory based on changes in the general price level. It involves converting inventory quantities into base-year dollars using the price index and calculating the LIFO reserve.
Step-by-step explanation:
Dollar-value LIFO (Last-In, First-Out) is a method of inventory valuation where the cost of inventory is adjusted based on changes in the general price level. The approach involves expressing the inventory quantities in terms of base-year dollars, which allows for the comparison and calculation of inflation adjustments.
To solve for dollar-value LIFO, you need to consider changes in the price index, which reflects changes in the general price level over time. The calculation involves converting the current year's inventory quantities into base-year dollars using the price index, determining the ending inventory at base-year prices, and then calculating the LIFO reserve.