Four Ways for Valuing Inventory

by Jamie
(Saint Louis)

Q: I have a question on my study guide for my final on Monday. It says "What are the 4 ways for valuing inventory?" I cannot find a definite answer to this question, I'm not even sure what is being asked. Help??


A:
FIFO. LIFO, Weighted Average Cost. And one other?

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The 4th Method
by: Bahij Sleiman

That would be "Specific Identification" - It is used for low volume / high value items such as Diamonds and Jewellery / Classic automobiles... In this case the accountant can identify the actual costs that have been allocated to each of his items.

Example:
* Car A was purchased in Feb 2007 for $75,899
* Car B was purchased in june 2008 for $66,569
* Car C was purchased in March 2009 for $90,122

When car B is sold today(in 2014) for $100,000, the following entry is made:
Cash/Bank/AR 100,000
Sales 100,000
Cost of Goods Sold 66,569
Inventory 66,569

No need, for FIFO, LIFO or Weighted average. Just the actual cost.

WAYS FOR VALUING INVENTORY
by: Anonymous

what are the four ways for valuing inventory

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