medium · Financial Accounting assets
What is the 'LIFO Conformity Rule' in the U.S. tax code?
- If a company uses LIFO, it must fully switch over to IFRS reporting standards within three fiscal years of election.
- If a company uses LIFO for tax purposes, it must also use LIFO for its external financial reporting.
- A company must use one identical inventory method across every product line to ensure consistency.
- Taxable income must always equal GAAP net income exactly for any company that elects to use LIFO for reporting.
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