LIFO Inventory Reserve—New Vehicles – Ford Online Accounting Manual

Assets

LIFO INVENTORY RESERVE—NEW VEHICLES	ASSET ACCOUNT
	1470

The difference between the Actual Cost and LIFO method of new vehicle inventory valuation should be recorded in this account.

			Jrnl.	Dr.	Cr.

To set up a reserve to reflect the difference between the FIFO method and the LIFO method of valuing the new vehicle inventories			GJ
	Cost of Sales—New Vehicles—LIFO			6200

		LIFO Inventory Reserve—New Vehicles			1470

NOTE:	Accounts 1471-1479 are available if additional reserve accounts for new vehicles are required.

Any decision to adopt the LIFO method of inventory valuation and any procedures adopted for accounting and financial reporting under LIFO should be made with the advice of competent tax counsel.

NOTE: For LIFO Dealers, working capital must be calculated as follows:

“Current Assets plus LIFO Reserve minus Current Liabilities“