Final answer:
Using the dollar-value LIFO inventory method, the adjusted inventory amounts (in base year dollars) for 2015, 2016, and 2017 are $330,000, $350,000, and $350,000, respectively. The adjustment considers the relevant price index for each year to deflate the inventory costs back to the base year level.
Step-by-step explanation:
To calculate the dollar-value LIFO inventory amounts for Acute Company at the end of each year, we need to adjust the inventory at year-end prices using the relevant price index for each year. This gives us inventory in base year (2014) dollars, to which we can apply the LIFO method.
Calculation for Year 2015:
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- Adjust for inflation: $363,000 / 1.10 = $330,000
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- Since 2015 is the first year after adopting dollar-value LIFO, the ending inventory is $330,000.
Calculation for Year 2016:
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- Adjust for inflation: $420,000 / 1.20 = $350,000
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- Calculate the increase in inventory: $350,000 - $330,000 = $20,000
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- Add the increase to previous LIFO inventory: $330,000 + $20,000 = $350,000
Calculation for Year 2017:
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- Adjust for inflation: $430,000 / 1.25 = $344,000
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- Calculate the increase in inventory: $344,000 - $350,000 = -$6,000 (a decrease)
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- Since there is a decrease, the ending inventory remains the same: $350,000
Thus, the dollar-value LIFO inventories for each year are:
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- 2015: $330,000
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- 2016: $350,000
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- 2017: $350,000 (no change from 2016 due to the decrease)