All 5 Inventory Valuation (FIFO/LIFO/AVCO) questions
More in Inventory Valuation (FIFO/LIFO/AVCO)
What is the FIFO method of inventory valuation? How do FIFO, LIFO and AVCO differ during rising prices? Work out closing inventory using AVCO. What does 'lower of cost and net realisable value' mean (IAS 2)?
Advertisement
Financial Accounting › Inventory Valuation (FIFO/LIFO/AVCO)

Is LIFO permitted under IFRS, and why?

Advanced

Answer

No. IAS 2 prohibits LIFO because it can distort the balance sheet (old, unrealistic costs) and profit; only FIFO and weighted average are allowed.
IFRS: FIFO or AVCO only (LIFO still allowed under US GAAP)
Real-world example A group reporting under IFRS cannot use LIFO even if a US subsidiary does locally.
All 5 Inventory Valuation (FIFO/LIFO/AVCO) questions