Dollar-value LIFO is an accounting method used for inventory that follows the last-in-first-out model. In an inflationary environment, it can more closely track the dollar value effect of cost of goods sold (COGS) and the resulting effect on net income than counting the inventory items in terms of units.Click to see full answer. Just so, how do you calculate dollar price LIFO? Dollar-value LIFO method Calculate the extended cost of the ending inventory at base year prices. Calculate the extended cost of the ending inventory at the most recent prices. Divide the total extended cost at the most recent prices by the total extended cost at base year prices. Secondly, what is a LIFO pool? Under this method, goods are combined into pools and all increases and decreases in a pool are measured in terms of total dollar value. The pools created under this method are, therefore, known as dollar-value LIFO pools. In respect to this, what is dollar value definition? The value of money is determined by the demand for it, just like the value of goods and services. There are three ways to measure the value of the dollar. The first is how much the dollar will buy in foreign currencies. That’s what the exchange rate measures. That is the amount of dollars held by foreign governments.What is LIFO reserve example? Example of LIFO Reserve LIFO also means that the older lower costs remain in inventory. With consistently increasing costs (and stable or increasing quantities of inventory items) the balance in the LIFO reserve account will be an ever-increasing credit balance that reduces the company’s FIFO inventory cost.