The Theoretical Defenses Of The Last In First Out Inventory Methods

Resumen

The Last in First out Method (LIFO) is presently under severe scrutiny from the financial community which may soon culminate in its repeal as an acceptable accounting method. There are pressures from the SEC in conjunction with the International Financial Accounting Standards Board (IFRS) to standardize accounting standards worldwide. In addition, there is political pressure imposed by the U.S. administration to raise additional revenues. Both groups strongly oppose LIFO, raising a strong possibility of its complete elimination. This paper addresses the reasons defending LIFO as an acceptable accounting method strictly from a financial reporting perspective.