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.
GAAP provides that a change in a firm's inventory method is generally applied retrospectively to the prior financial statements presented in the current year's annual report (Accounting Standards Codification [ASC] section 250: Accounting Changes and Error Corrections) Assuming that the new inventory method increases the book value of inventory relative to LIFO (as is generally the case), a company will increase the book value of inventory, increase retained earnings to reflect an increase in net income, and increase income tax liability (current and deferred) due to the increase in taxable income.
Although a brief summary of LIFO and FIFO is presented in the case, a more thorough review may be necessary.
One important aspect of this change is the elimination of the use of the LIFO method because the IFRS simply does not allow it.
While most respondents felt LIFO routing was definitely the better methodology, there were definitely some areas of concern.
That's because IFRS does not permit a company to use LIFO for financial reporting purposes.
Most of these studies focused on two inventory methods--FIFO and LIFO.
In June, TEI urged the Senate Finance Committee to retain the last-in, first-out inventory (LIFO) accounting method as part of the Internal Revenue Code.
And another 20% are completely oblivious to their weaknesses, the Life Orientations (LIFO) survey of 1,100 subjects has found.
The Service's Long Island Field Office (LIFO) continues to make strides in protecting the piping plover on privately held lands and lands managed by federal, state, and local governmental agencies.