ACCT 212 Week 4 DQ 2 LIFO

LIFO (Graded)

Under US GAAP, management has choices about how to value current inventory and also the cost of goods sold. For example, they can choose LIFO or FIFO to value their inventory.) However, under International Financial Reporting Standards (IFRS), LIFO is not an option. To be in compliance with IFRS, international companies cannot use LIFO. Therefore, the majority of companies use FIFO to value their inventory and thus calculate cost of goods. 

Explain what LIFO means. Then, state whether you believe that IFRS is correct in disallowing LIFO to value inventory and provide your reasoning.