QV-TV, Inc. provided the following items in its notes to the financial statements for the year-end 2016: Cost of goods sold was $22 billion under FIFO costing and the inventory value under FIFO costing was $2.1 billion. The LIFO Reserve for year-end 2015 was $0.6 billion and at year-end 2016 it had increased to $0.8 billion. What is the LIFO inventory value at year-end 2016?
A)$1.9 billion.
B)$2.9 billion.
C)$2.3 billion.
D)$1.3 billion.

Question

Quizplus · Accepted Answer

The formula to calculate LIFO inventory value is LIFO Reserve + FIFO Inventory Value = LIFO Inventory Value.
LIFO Reserve at year-end 2016 = $0.8 billion
FIFO Inventory Value = Cost of goods sold + FIFO inventory value - LIFO Reserve
FIFO Inventory Value = $22 billion + $2.1 billion - $0.8 billion = $23.3 billion
LIFO Inventory Value = LIFO Reserve + FIFO Inventory Value = $0.8 billion + $23.3 billion = $24.1 billion
Therefore, the LIFO inventory value at year-end 2016 is $1.3 billion.