Final answer:
Most companies currently using the LIFO inventory valuation method opt for dollar-value LIFO, as it handles inflation well by grouping goods into pools valued in total.
Step-by-step explanation:
Dollar-value LIFO is an accounting method used for inventory that follows the last-in-first-out model. Dollar-value LIFO uses this approach with all figures in dollar amounts, rather than in inventory units. Currency prices can be determined in two main ways: a floating rate or a fixed rate. A floating rate is determined by the open market through supply and demand on global currency markets. Therefore, if the demand for the currency is high, the value will increase.
The approach employed by most companies that currently use the LIFO (Last-In, First-Out) method is dollar-value LIFO. This inventory valuation method is often preferred over unit LIFO, specific goods LIFO, or specific goods pooled LIFO, primarily because it allows for the grouping of goods into pools that are valued in total, rather than tracking individual units. Dollar-value LIFO is advantageous for companies facing inflationary pressures as it matches the most recent costs with current revenues, and tends to smooth out the effects of price fluctuations across the entire inventory pool.