A Roadblock to US Adoption of IFRS IS LIFO Inventory Valuation
Global Journal of Business Research, Vol. 4, No. 4, pp. 41-49, 2010
9 Pages Posted: 29 Jun 2011 Last revised: 27 Feb 2012
Date Written: 2010
A roadblock exists between International Financial Reporting Standards, (IFRS) and United States Generally Accepted Accounting Standards, (US GAAP) in the area of acceptable methods of inventory valuation. IFRS recognizes the First In First Out Method, FIFO, and the Weighted Average Method of Inventory Valuation as acceptable methods of inventory valuation. It does not recognize or allow the Last In First Out Method of Inventory Valuation, LIFO, as currently used in the United States. Canceling LIFO would require most large US companies to pay excessive amounts of additional income tax to the Internal Revenue Service, IRS. In order for the United States to adopt IFRS Accounting Standards, the elimination of LIFO would have to occur.
Keywords: IFRS, LIFO, FIFO, Inventory Valuation, LIFO Conformity Requirement
JEL Classification: M41, M48
Suggested Citation: Suggested Citation