LIFO Inventory Reserve—Parts – Ford Online Accounting Manual

Assets

LIFO INVENTORY RESERVE—PARTS	ASSET ACCOUNT
	1490

The difference between the FIFO method and LIFO method of parts 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 parts inventory			GJ
	Cost of Sales—Parts—LIFO			6300

		LIFO Inventory Reserve—Parts			1490

NOTE:	Accounts 1491-1499 are available if additional reserve accounts for parts inventories 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“