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Posted: August 26th, 2022
Many countries around the world do not allow use of the LIFO method.
Can I Use Both LIFO and FIFO?Many countries around the world do not allow use of the LIFO method. The harmonization of accounting standards across countries may require a compromise on the use of LIFO concepts. Some accountants in the United States are suggesting the use of a LIFO/FIFO system that would use LIFO on the income statement and FIFO on the balance sheet. This method would not be a cost allocation method because in most cases it would not result in a clean allocation of cost of goods available for sale into ending inventory and cost of goods sold. What theoretical arguments can be made in favor of this hybrid LIFO/FIFO system? One practical problem that would arise from using different methods for the income statement and the balance sheet is that the balance sheet wouldnât balance. How would you suggest solving this problem?
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