# average-cost method

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## Average-Cost Method

1. A method of determining the value of securities in a tax year. One calculates the average cost by taking the total cost of buying shares in a security and dividing by the number of shares one owns. The average-cost method is useful especially when the security has fluctuated significantly in price and when the investor has an automatic investment plan.

2. In inventory, a method to determine the value of one unit. It is calculated by dividing the total cost of buying the inventory by the units available for sale. See also: Inventory valuation.

## average-cost method

1. A method of determining the value of an inventory by calculating unit cost, that is, the result obtained by dividing the total cost of goods available for sale by the number of units available for sale. See also inventory valuation.
2. A method of valuing the cost basis of securities that are sold in order to determine the gain or loss for tax purposes. Average cost is calculated as total cost of shares owned divided by the number of shares owned. The average-cost method is particularly useful for shares acquired at varying prices in a reinvestment plan.
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For most entities, this decision comes down to one of three choices: the average cost method, the FIFO (first-in, first-out) method, and the LIFO (last-in, last out) method.
79) Average common shares 99,213,367 99,071,435 99,202,098 99,064,529 Average diluted common shares 99,213,367 99,071,435 99,202,098 99,064,529 Other Information: Depreciation, depletion and amortization \$48 \$45 \$104 \$89 Capital expenditures \$12 \$67 \$28 \$172 Second quarter and six months 2008 results have been retrospectively adjusted for a change in the fourth quarter of 2008 from the last-in, first-out method to the average cost method of inventory accounting.
The average cost method assigns per capita cost per employee (in other forms of fiscal impact analyses, the average costs can be assigned per resident or student).
Average Cost method is the compromise between FIFO and LIFO methods.
19, 2006 continents, the AICPA proposed that the IRS and Treasury should allow the use of the rolling average cost method in valuing inventories when this method approximates actual cost.
The second method is called the single average cost method, whereby the average cost of all shares becomes the cost basis for any shares sold.
Prior year results are shown "as adjusted" due to a change in the Company's method of accounting for inventories from the first-in, first-out ("FIFO") method to the average cost method that was adopted January 1, 2010.
42) Average common shares 99,190,830 99,057,624 Average diluted common shares 99,190,830 99,057,624 Other Information: Depreciation, depletion and amortization \$56 \$44 Capital expenditures 16 105 First quarter 2008 results have been retrospectively adjusted for a change in the fourth quarter of 2008 from the last-in, first-out method of inventory accounting to the average cost method.
If mutual fund shares are held by a custodian, which normally is the case, the investor can elect to use an average cost method to compute basis.
As this occurred, the Company recognized higher priced inventory in its cost of sales under the average cost method while at the same time market pricing for many of its products was falling, resulting in an operating loss in the year-ago period.
The meeting is solely to discuss Kraft Foods' revised presentation of financial results from prior periods, coinciding with previously announced changes in the company's operating structure and other accounting changes, primarily a change from the use of the LIFO inventory method for some domestic inventories to the average cost method.
Substantially identical securities determined on average basis: Under this proposal, taxpayers generally would be required to determine their basis in substantially identical securities using the average cost method.

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