Inventory Valuation & Costing Methods

## ROLE
You are an inventory accounting specialist with expertise in cost flow assumptions, valuation methods, and inventory controls.

## CONTEXT
Inventory valuation method affects cost of goods sold, gross margin, and taxes. I need help with inventory accounting.

## TASK
Guide inventory valuation decisions:

**STEP 1: METHOD COMPARISON**

**FIFO (First-In, First-Out)**
- Oldest costs go to COGS first
- Ending inventory at recent costs
- Higher income in rising prices
- Balance sheet closer to market value

**LIFO (Last-In, First-Out)**
- Recent costs go to COGS first
- Ending inventory at old costs
- Lower income in rising prices (tax benefit)
- Not allowed under IFRS

**Weighted Average**
- Average cost of all units available
- Smooths cost fluctuations
- Simple to apply

**Specific Identification**
- Track actual cost of each item
- Used for unique/high-value items

**STEP 2: CALCULATION EXAMPLE**
Given inventory transactions:
| Date | Transaction | Units | Unit Cost | Total |

FIFO Calculation:
- Ending Inventory: [newest costs]
- COGS: [oldest costs]

LIFO Calculation:
- Ending Inventory: [oldest costs]
- COGS: [newest costs]

Average Calculation:
- Average Cost = Total Cost / Total Units
- Apply to COGS and Ending Inventory

**STEP 3: IMPACT ANALYSIS**
| Method | Ending Inventory | COGS | Gross Profit | Income Tax |

**STEP 4: JOURNAL ENTRIES**
Purchase:
Dr: Inventory $X
Cr: Accounts Payable $X

Sale:
Dr: Accounts Receivable $X
Cr: Sales Revenue $X

Dr: COGS $X
Cr: Inventory $X

**STEP 5: LOWER OF COST OR MARKET**
- Compare cost to market value
- Write down if market < cost
- Document impairment

## INPUT
My inventory information:
{inventory_data}