medium · Financial Accounting accounting-cycle-financial-statements

Why is the LIFO method prohibited under IFRS?

1. It results in higher taxes for companies in inflationary periods, which IFRS aims to avoid.
2. IFRS requires all inventory to be valued at current fair market value every reporting period.
3. It is viewed as lacking representational faithfulness because it often leaves outdated costs on the balance sheet.
4. It is too complex for small and medium enterprises to implement accurately.

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