Dollar Value LIFO

This video discusses how to use Dollar-Value LIFO to value inventory. A comprehensive example is provided to demonstrate how ending inventory is calculated using Dollar-Value LIFO.
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[@katherinepurcell963]

Thanks so much! My textbook explains what to do, but never why (or it uses such convoluted language that it's impossible for a student to understand), so committing certain processes to memory and applying them broadly to different scenarios can be really difficult; but these breakdowns always make things so much clearer! I fist pump whenever I search KZbin for an accounting concept I'm having trouble with and one of your videos pops up.

[@Edspira]

Awesome...Love the fist pump!

[@Imahappygirl25]

It's like listening to Chef John teaching me accounting concepts, I love it!

[@Edspira]

I hear that so much! Some people also say my voice sounds like that of John C. Reilly

[@Mjames1010]

I always said the same thing lol!!!!!!

[@icedjiggythug]

Thank you so much for this - I have my CPA exam coming up soon and this really helped

[@Edspira]

Moody Swings Good luck on the test!!

[@icecold1805]

Hey Moody. I am a non-US citizen planning to prepare myself for the CPA test in a future. I have researched a lot about the test, it's divided in four topics, it can take up to 4 hours or so, and all that, but what I couldn't yet find is the most basic question: What's the test like? Is it on paper? a computer? Is it done at a classroom or from home?.

[@elijahfoster2]

@@icecold1805 It's on the computer. You have to go to a testing center to take the exam.

[@aaronrayk]

How did you do on the exam

[@ayannacharris]

You are literally the best!! I am studying for the CPA exam and this was better than the textbook :)

[@Edspira]

Wow, thank you! Good luck with the CPA exam!

[@yuktaaawhy]

What a simple & perfect explanation! Thanks a lot this is helpful for my CPA exam!

[@amitozsingh2124]

as i am preparing for my cpa, and i want to say your lectures are really helping me a lot , thank you so much

[@Tamara-ju3lh]

Thank you! My FAR exam is next week and this is one of my weak topics. You explain things so clearly!

[@Edspira]

Good luck on the exam, I hope you ace it!

[@booboo3186]

I missed all practice questions in becker FAR on this topic. After watching your videos, I got all of them correct. Thank you very much for making it so easy.

[@MyFinancialFocus]

I love inventory accounting!

[@triassic911]

Why can't schools make videos like this? I swear the professors don't understand perspective, they talk to students about information as if they are supposed to understand it right away. Textbooks with the constant reading does not help to captivate and teach. Thanks for these accounting videos. They are a blessing.

[@romayadav1600]

so helpful, have CPA exam coming up and this helped so much to clear the concept.

[@Edspira]

Good luck on the CPA exam!

[@sandeeppai2271]

This is a life saver! Becker tells me what to do but only u explain why things are done ! thanks!

[@Edspira]

So glad you're finding the videos helpful my friend! Let me know when you pass the CPA exam!

[@antoniodedr]

You have made this topic so much easier and I thank you for that. I'm taking a CPA review course and they have confused me to the core. You're brilliant! Thank you

[@eileensam9253]

THANK YOU! This has been confusing me in class for weeks now and I finally get it! You're saving my exam grade

[@siddharthshivaramakrishnan5604]

My college accounting exam is the day after tomorrow, and I absolutely love the way you explain concepts. Thank you so much for your videos!!

[@tvnet222]

I don't know what gibberish my accounting professor says but this made it so much clearer for me thank you so much!

[@user-hb9tf4yp9n]

Thank you for walking through the practicality of this concept

[@Edspira]

Happy to help!

[@jep05f]

That was incredibly helpful! You explained that in a short video when my professor struggled through the whole class to explain, albeit unsuccessfully.

[@joedemidovich6530]

Really awesome video! You make this so much more understandable than any textbook.

[@Jerome-uj5xh]

I like this setup a lot better than how it's done in class... Thanks a bunch.

[@indiansfever11]

Bless you sir, you got me the right answer... but why people taking CPA getting this topic and I'm only in Accounting 3 😭

[@gkoknok6076]

Dude, god bless you. I mean everything is in the book, but it's one gigantic maze and you lead us through it perfectly. Thank you.

[@TrumanHugh]

Thank you SO much for all your videos! You helped me pass REG a couple of months ago, and now you're helping me pass FAR. I couldn't do it with your expertise and excellent guidance!!

[@samh1403]

Thank you, your videos are very helpful. I wish I had professors like you. Online professors have gotten way too lazy. Most of mine don't even offer any videos or even narrated power points, they don't even have to grade very much anymore.

[@clmkc5393]

Market to market accounting for inventory valuation! A great way to cook the books, fool the bankers and stockholders.

[@sebastianquintero7351]

I learned more with your videos than in my college classes. Thanks a lot!

[@yuniorgalardy2781]

Thank you for posting this video. This is the best explanation of this concept on the web. Please continue to share your knowledge with the rest of us.

[@Aduthan]

I normally never comment, but so much awesome this video is. It is just as brilliant as it is concise. Like Katherine Purcell have mentioned in another comment, my CPA review textbook gives me steps for computation, but never the rationale behind each step. Kudos and much appreciated. Awesome work 👌

[@christiandrotor8301]

Thanks a lot for taking the time to post. It seems so much crazier in the book.

[@justinrosenbaum6672]

Your videos are extremely informative and helpful. Thankyou for taking the time to do this, it is much appreciated!

[@Edspira]

Justin, It's my pleasure! I have 16 videos on inventory if you are interested: edspira.com/lessons/inventory All the videos are free of charge. Good luck with your studies!

[@killerinstinct1054]

Very helpful! I wish my accounting teacher could have explained it so well.

[@manojj7039]

Mr. McLaughlin sounds like Josh from Stuff you you should know podcast. It's like listening to accounting SYSK.

[@ChristianHammad]

Great video. I came here to supplement my Becker material. This was an outstanding explanation. kudos!

[@juhimalhotra7786]

Thank you so much for making this topic easy through your wonderful explanation.

[@lukehartmann7069]

Thanks for the explanation. very easy to follow.

[@cschenks5431]

Thank you for explaining when my textbook couldn't.

[@fromtaiwan100]

Thank you. Nice explanation!

[@goatloochie]

So much better than Becker, thank you.

[@manojj7039]

Thank you very much.

[@Edspira]

Welcome 😊

[@amandalewis7525]

Great tutorial! easily understood

[@MrAnji1995]

Thanks so much. Jesus Christ my accounting teacher at school only scratches the surface with her boring explanation, what a waste of money. Save your tuition money and go to KZbin people!

[@elishahabainza3190]

You’re such a great teacher!!

[@Edspira]

Thanks Elishah!

[@curry2131]

Great!!! Awesome professor.

[@Edspira]

Thank you for the kind words!

[@curry2131]

Thank YOU for the very useful videos!

[@WDemon]

Thank you

[@Edspira]

You're welcome!

[@sorooshpouladian8540]

Thank you. Now I understand what is going on!!

[@KateMcCrady]

Very helpful, thank you!!

[@janetjosselyn5379]

Very clear. Thank you so much!

[@Edspira]

+Janet Josselyn No problem!

[@alexakershaw8585]

thank you so much king

[@MsStolga]

Thank you!

[@yingyufeng5671]

Thank you so much!!!!!!

[@nicktanner8231]

Are we re-inflating each layer because by doing this we are increasing ending inventory which when we expense will lead to higher cost which leads to lower taxes? so essentially we are adding some cost of inflation to inventory to lower taxes? I have no idea if this theory is correct, just tossing it out there.

[@AnimeHumanCoherence]

Hello, this is Chef John from Edspira dot com with.... Dollar-Value LIFO!

[@nanhein9933]

Wonderful video! Would you PLEASE make one on the dollar value LIFO retail method of estimating inventory? I am so confused. Thanks you!

[@sraaact]

Good video, have a question however, how do you calculate it, if the first year is negative rather than positive. I have that type of problem on an online accounting course and it has been returned back twice for me to correct it, having a hard time figuring it out

[@-chris2259]

Excellent video !

[@marynka9]

It helped, thank you

[@TheWaveism]

Amazing video. Thanks!

[@sydney0stafford]

Thanks so much! Just one question though. When we must create the 2019 layers, why do we use all of the First Year layer, 2017, as opposed to the 2018 layer. Wouldn't the 2018 layer be LAST in, first out, and the 2017 layer be first in first out?

[@kristinageorge2944]

THANK YOU!

[@Edspira]

You're very welcome!

[@mbilalmiraki5863]

thanks for doing the great job

[@norawarner]

so clear!!! thank you!!!!!!!!!!!!!! easy like that :-) Grazie

[@Edspira]

Happy to help!

[@robertcarder9089]

You're amazing! :D

[@robinduong949]

What is the reason we multiply the $18,000 in the very very last row in the 2nd table with 1.10, and not 1.25? Is it because we are "eating into" the previous layer, which has Price Index of 1.1?

[@yussufhussein9636]

Robin Duong it’s because the price has gone down. if it had went up like the first year, we would have used the 1.25 PI.

[@votelauren2007]

Your videos are great, thank you! I am a little confused by one part of this video. When you divide the end of year price by the price index, I did not get the correct number. $330,000 / 110 = $3,000. Why did you get $300,000. Sorry if this is a stupid question!

[@jordanghartman]

+votelauren2007 I was confused with this too. It looks like you divide the $330,000 by 1.10 for the CPI. So: $330,000/1.10 = $300,000. Hope that helps!

[@votelauren2007]

It does, thank you! I think the problem is I do not understand CPI. That will me my next lesson. lol

[@SiriNormal]

330000/(110/100) he didn't describe the math quite right, good question..obviously 2 years ago haha

[@anthonylarocco573]

The Price increased by 10%.

[@oxdavy3767]

I am not sure whether anyone will see my question, but I don`t understand why we must multiply the layers by the price indexes the second time. Can someone explain that part to me?

[@Edspira]

The first time, you divide by the price index to determine the amount of inventory that was added/used each year. This accounts for inflation/deflation of prices and puts the inventory at base year cost. The second time, you multiply by the price index to put the inventory on the books at LIFO cost.

[@dhanya_contemplation]

Thank you so much for the clear explanation Sir, you are making topics seem easier. If we assume that base year price for 2019 is $400,000 and as on Dec31,2019 $10,000 are subject to erosion, then is the Ending inventory @LIFO cost $453,000 as on 2019 ? Sir, can you please clarify this doubt. :)

[@nobinpradhan9235]

A bit confusing. The ending inventory values are not DIVIDED by CPIs such as 110 and 125. Rather, the ending inventories are divided by 1.10 and 1.25 respectively

[@marylopez9844]

Your video has really helped me undrstand. One question though, why don't you use the CPI of year 2019 when removing the layer for 2019?

[@dukejt]

Because the the ending inventory of 2019 at base year prices went down $12,000 we are not going to be adding a layer now we are going to be eating into the 2018 layer.

[@stantonh1452]

Why do you divide by the cpi in the first part and then multiply by the cpi in the second part?

[@francescociccone2224]

I think this topic is not so clear, also because the video cutt-off at the end of the explanation. but, I think this is all a matter of indexing the value of the products in a manner that I can evaluate and try to erase the lifo layer erosion in an inflation enviroment. Am I right?

[@PSYCHOSTORM32]

So if in 2020 the ending base year inventroy was 265000 would the price index be 1 or less than that?

[@shailengautam9423]

Thanks a lot!!! It was very helpful. : )

[@nitheeshsudhakaran1746]

amazing explanation :)

[@davidtaken3557]

Teacher I didn’t understand in 2019 in price index why you wrote 110 instead 125?? Sorry about my eng

[@jgblanco3625]

what do I do if it decreases instead of decreasing

[@shawnsnow6413]

I think I love you!

[@Edspira]

Thanks for watching Shawn!

[@jadencasto]

Whoever allowed for LIFO in GAAP...😠 Haha, but thanks for the video!

[@XDN_MasterHomie]

isnt it 15,000. instead 18,000.?

[@radioactivenight3293]

I know this is 5 years after the video. But this is the only good example of a smaller inventory size in an example. Accounting Books are useless all hail youtube professors.

[@MrAnji1995]

Okay, great video content and everything. BUT, omfg, does anyone else also think he sounds EXACTLY like Chef John from foodwishes???? LIKE OMFG! It could've been Chef John and Chef John is actually living a double life! OR IT COULD BE Michael McLaighlin that is the one living the double life!!!!! Anyone???

[@adeled8833]

i like math, and this approach makes me wanna vomit. starting from randomized index that is only applied to the current year(base year items cannot inflate in price, aye...), ending with lifo approach itself. great explanation though

[@Kryso_0]

the base year in the example was indexed at 100, so not inflated?

[@IAmTheMiilkman]

Ain't no planet X coming cuz ain't no space cuz ain't no globe earth.

[@xgum]

all these stupid demo problems are year by year. no help for people with problems where there are march, june, dec entries per year. so confusing.

[@kaileyzalevsky5380]

Thank you so much! Studying for CPA exam and found this very helpful!

[@kerrioconnor2338]

Thank you!