Webster Products, Inc., adopted the dollar-value LIFO method of determining inventory costs for financial and income tax reporting on January 1, 2011. Webster continues to use the FIFO method for internal decision-making purposes. Webster's FIFO inventories at December 31, 2011, 2012, and 2013, were $300,000, $412,500, and $585,000, respectively. Internally generated cost indexes are used to convert FIFO inventory amounts to dollar-value LIFO amounts. Webster estimated these indexes as follows:
2011 ...... 1.00
2012 ...... 1.25
2013 ...... 1.50
Required:
1. Determine Webster's dollar-value LIFO inventory at December 31, 2012 and 2013.
2. Describe how the change should have been reported in Webster's 2011 financial statements.