Accounting - FIFO, LIFO and AVCO?

Question

In accounting terms, for valuing stock, there are three methods; FIFO, LIFO and AVCO. I know LIFO cannot be used as it is against accounting standards - does anyone know of a good website where it says this?

Answer 1

It may be prohibited by your country's tax authority, but apart from the tax treatment, it's not permitted by the IASB in IAS 2.

"For items that are interchangeable, IAS 2 allows the FIFO or weighted average cost formulas. [IAS 2.25] The LIFO formula, which had been allowed prior to the 2003 revision of IAS 2, is no longer allowed."

Answer 2

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Answer 3

Sorry Johnny L but your explanation of LIFO is not correct. That is the specific identification method. You are valuing them at the cost of the last purchase price not the purchase price attached to the good at that specific time so even though the units sold on the 14th would technically have a cost of $92 LIFO method would value the cost them at $95 because its is based on the last price so the ending inventory on those last 32 unit that went unsold would be what is based on the beginning cost 10 unitsx 90=$900 22 units x 92=$2024 Therefore Eending Inventory is 2924

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