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those methods and procedures for the years in issue were as
follows.
1. Departments
Store inventories were divided into departments and
subdepartments. Shrinkage accrual was made only for the grocery,
drug/general merchandise, and cosmetics departments.
2. Retail Method of Inventory Valuation
The retail method of valuing inventory was used by the KFS
division for store inventories in the grocery, drug/general
merchandise, and cosmetics departments. Under the retail method,
the cost of goods sold is estimated by multiplying sales revenue
by the “cost complement”. That technique translates the retail
dollar value of the goods sold into its approximate cost dollar
value.
3. LIFO
Beginning with 1979, Kroger elected to use the last-in-
first-out (LIFO) method of accounting. Kroger valued its
inventories in stores and warehouses using the dollar value, link
chain method of implementing LIFO. The KFS division also elected
to use statistical sample techniques to determine the dollar
value indexes. The KFS division initially used a single LIFO
pool for all items in the grocery, drug/general merchandise, and
cosmetics departments. Beginning with 1986, the KFS division
allocated its single pool into nine pools.
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Last modified: May 25, 2011