Last In, First Out - LIFO

What is 'Last In, First Out - LIFO'

Last in, first out (LIFO) is an asset-management and valuation method that assumes that assets produced or acquired last are the ones that are used, sold or disposed of first.

BREAKING DOWN 'Last In, First Out - LIFO'

LIFO assumes that an entity sells, uses or disposes of its newest inventory first. If an asset is sold for less than it is acquired for, then the difference is considered a capital loss. If an asset is sold for more than it is acquired for, the difference is considered a capital gain. Using the LIFO method to evaluate and manage inventory can be tax advantageous, but it may also increase tax liability.

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RELATED FAQS
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    The correct answer is: b) Remember that LIFO transmits the latest prices of inventory over to cost. Therefore, what's left ... Read Answer >>
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    The main difference between weighted average cost accounting, LIFO, and FIFO methods of accounting is the difference in which ... Read Answer >>
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