LIFO

Eric Morey eric at glodime.com
Thu Apr 26 12:55:34 EDT 2012


On Thu, 2012-04-26 at 12:11 +0200, Fredrik Persson wrote:
> I am not familiar with the abbreviation "FIFO" (at first I assumed you
>  mean First-In First-Out, a programmer term).

Correct. Programmers borrowed it from accountants.

>  LIFO, what is that? (I am not american, so I've never run into these
>  abbreviations.)

Last-In-First-Out: Another method of accounting for Inventory and Cost
of Goods Sold that is falling out of favor, but is still used in the US
under Generally Accepted Accounting Practices (US GAAP). US GAAP may
soon be supplanted (by 2015) by IFRS in Public Companies in the US. The
IASB prohibited LIFO in its 2003 Improvements Project.

>From CFO.com:
"LIFO allows companies to calculate the cost of goods sold based on the
price of the most recently purchased (“last-in”) inventory, rather than
inventory that was purchased more cheaply in the past and has been
sitting on the shelf. That boosts the cost of goods sold, which lowers
profits – and, thus, taxable income. LIFO is particularly important to
companies that have slow-moving inventory."
http://www.cfo.com/article.cfm/14508745/c_14515016


>From Wikipeidia:
"International Financial Reporting Standards (IFRS) are principles-based
standards, interpretations and the framework (1989)[1] adopted by the
International Accounting Standards Board (IASB).

Many of the standards forming part of IFRS are known by the older name
of International Accounting Standards (IAS). IAS were issued between
1973 and 2001 by the Board of the International Accounting Standards
Committee (IASC). On April 1, 2001, the new IASB took over from the IASC
the responsibility for setting International Accounting Standards.
During its first meeting the new Board adopted existing IAS and Standing
Interpretations Committee standards (SICs). The IASB has continued to
develop standards calling the new standards IFRS."

More reading:
http://www.journalofaccountancy.com/issues/2009/jan/deathoflifo.htm

http://www.cs.trinity.edu/rjensen/Calgary/CD/JensenPowerPoint/IAS%20Plus%20-%20Comparison%20of%20IFRSs%20and%20US%20GAAP.htm

http://www.sec.gov/spotlight/globalaccountingstandards/ifrs-work-plan-paper-111611-gaap.pdf





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