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northwest refinery sells gasoline to gas stations. they use a lifo inventory system. for 2022, their inventory was valued at $36 billion. on their financial statements, they stated that their lifo reserve is $482 million. what is northwest refinery's 2022 inventory assuming fifo?

Respuesta :

Gasoline is offered by Northwest Refinery to petrol stations. Assuming the Northwest Refinery's 2022 inventory FIFO is $36.482 billion, they employ a LIFO inventory system.

The value utilized for the ending inventory formula is based on the cost of the oldest units because the LIFO approach dictates that the last units purchased are sold first.

In order to calculate LIFO (Last-in, First-Out), multiply the cost of your most recent inventory by the quantity of goods sold, as opposed to FIFO (First-In, First-Out), which multiplies the cost of your oldest inventory by the quantity of inventory sold.

Utilizing LIFO cost accounting has advantages for virtually every industry that is experiencing expense increases. For instance, because practically every item that supermarkets and pharmacies carry experiences inflation, many of them adopt LIFO cost accounting.

Ending Inventory Under FIFO For 2022 = Ending Inventory Reported Under LIFO + LIFO Reserve

= $36 Billion + $482 Million

= $36.482 Billion

To learn more about LIFO

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