medium · Financial Accounting accounting-cycle-financial-statements

Why is the LIFO method prohibited under IFRS?

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 It is viewed as lacking representational faithfulness because it often leaves outdated costs on the balance sheet.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

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