So I watched the weekly covering "Alternative Inventory Costing Methods" yesterday and I was wondering what do you do differently when there is more than one year and with LIFO? It was mentioned that it only showed up twice in all the Finals, however what would you do differently in the question? If its too long to explain its fine you can just summarize.
Thanks in advance.
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The logic would all still be the same; the cost flow assumption will matter when you are doing the absorption cost approach as under this approach unit costs of production are not the same each year and so when we are calculating cost of goods sold you would need to ensure that you are in fact using the unit costs from the year in which the units sold are actually produced. Also when you are reconciling net income figures and accounting for costs of beginning or ending inventories once again you need to be sure to use the unit costs from the year in which the units are actually produced. Hope that helps.
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