LIFO


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LIFO

An abbreviation for last in, first out, a method used in inventory accounting to value the merchandise of a particular business.

LIFO assumes that the last goods purchased are the first sold and, as a result, those items that remain unsold in the inventory at the end of the year are assumed to be those which were purchased first.

Cross-references

FIFO.

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However, under the LIFO method, the inventory on hand at the conversion date is not treated as being disposed of until the conversion layer is decreased.
The increase in multinational companies and the disparity in financial reporting standards among countries add to the complexity of satisfying the LIFO conformity rule.
Consistency of All inventories No explicit guidance, measurement having similar so companies can use nature and use LIFO for U.
Present a short report or memorandum on the assessment of the switch away from LIFO on the current financing situation of the company as well on its prospective issuance of common stock.
The tax benefits associated with using the LIFO method must in turn be balanced against the other reality of reporting lower earnings.
While most respondents felt LIFO routing was definitely the better methodology, there were definitely some areas of concern.
For this reason, it is likely that Congress would repeal the LIFO method prior to any effective date for conversion to IFRS, so that it can "score" the revenue gains from the resulting Sec.
The study also included a survey of financial executives to determine their rationale for adopting either FIFO or LIFO inventory valuation.
Boyle concluded, "the LIFO method has provided for the proper matching of revenues and expenses in the computation of the cost of goods sold and taxable profits, especially in periods of rising prices.
There are a wealth of reasons for a company to choose FIFO or LIFO to value its inventory and measure its costs.
But Dollar-Value LIFO is simply an application of LIFO to periods with changing prices.
Under the LIFO method, the cheaper price will be used in calculating the total cost of making the product.