The Hazim Company is a wholesale distributor of automotivereplacement parts. For purposes of
this question, assume on January 1, year 3, Hazim Co. adoptedthe dollar-value LIFO method of
determining inventory costs for financial and income-taxreporting. The following information relates
to this change:
Hazim has continued to use the FIFO method forinternal reporting purposes. Hazim's FIFO
inventories at December 31, Year 3, Year 4, and Year 5, were$100,000, $137,500, and $195,000,
respectively.
The FIFO inventory amounts are converted to dollar-value LIFOamounts using a single inventory
pool and annual cost indexes. Hazim uses the annual indexesdeveloped by its industry trade
association: 1.25 for year 4 and 1.50 for year 5.
Calculate Hazim's dollar-value LIFO inventory at December 31,Year 4 and Year 5. Show all
calculations
