LIFO Essays

The choice of inventory accounting methods, specifically for the case of FIFO and LIFO, has developed into a decision, which includes varying consequences and comes with specific implications and benefits, such as communicating private information with FIFO (Hughes, and Schwartz, 1988, p.42) or tax benefits for the choice of LIFO (Morse and Richardson, 1983, p.125). Every firm and manager has to face the decision of which accounting method to choose, and has to include several aspects into their

first-out inventory (LIFO) method by the IFRS has been always the center of the discussion. Related to this has been the significant difference between IFRS versus US GAAP regarding the application of the lower of cost or market (LCM) measurement and reporting of inventory. US GAAP inventory rules are more conservative than IFRS inventory rules. There are four significant differences between US GAAP and IFRS.  IFRS permits to use FIFO and weighted average method but LIFO is prohibited  IFRS

majority of Target inventory is accounted for under the retail inventory accounting method (RIM) using the last-in, first-out (LIFO) method. Inventory is stated at the lower of LIFO cost or market. Target use the retail inventory method to account for inventory and cost of sales. Under LIFO Target uses this method for inventory because using the last-in, first-out (LIFO) method this determines the cost-to-retail ratio to each merchandise ending retail value. The cost of our inventory includes: 1

Oil and gas companies use LIFO, much like the rest of the business world, to gain the tax benefit that LIFO provides. However, LIFO allows Chesapeake to record the cost of inventory at the most recent price paid- even though some of the inventory was purchased when oil was selling at a much lower price. Profits would then be understated for that particular year since LIFO would yield a higher cost of goods sold. Although it is legal to use LIFO as an accounting method for inventory Chesapeake

For recording purposes this is one of the better choices for inventory. One drawback is that with inflation their prices will seem higher causing for greater recoded revenue and higher income tax. On the contrary Walgreens used the Last-In-Last-Out (LIFO) Method. This method unlike FIFO assumes

Facts In fact, C Corporation is a legal tax status, and it is not a business type or category. To the IRS all the commercial identities are considerate C corporation which means double taxation purposes. The only method allowed by the IRS to be a S corporation is to request and file the Form 2553. Corporate taxation levels are avoided with the form 1120-S. C Corporation is a separate individual or identity from its shareholders. From state business law view, the origin of all the corporation is

The Kroger Company was started in 1883 by Barney Kroger in Cincinnati, Ohio. He spent his whole life savings on that one small store. He had a simple philosophy that he stood by—“Be particular. Never sell anything you would not want yourself.” Kroger took that one little store and turned it into one of the largest retailers in the United States. Now, Kroger consists of more than 2,700 stores. Its operations stretch from one coast to the other and leading its industry in technology and innovation

Ethics case 19-3 deals with issues related to a company changing its inventory method from LIFO to FIFO and any perceived ethical dilemmas that might be involved due to stock options being influenced by the company’s net income. Often times, companies will change their inventory method due to changing circumstances such as different economic conditions, changes within an industry, or even from a mandated change by the FASB (Spiceland, Sepe, & Nelson, 2013). The reason the company in this question

sold first. Last in, first out (LIFO), on the other hand, allows for the most recent inventory to be sold first leaving the old inventory to be sold last (Gray). LIFO is prohibited by the IFRS due to the misrepresentation it can have on financial statements (Gray). Some incentives for companies to utilize LIFO under GAAP allow for companies to report a lower taxable income because cost of goods sold is higher using this method (Willmore). Some believe that using LIFO provides more stable profits and

manipulate its cost of goods sold that is able to change its gross profit in a higher level. This may be why the company uses FIFO for its inventory management. We have learned that LIFO is used by companies to defer their income tax payments. In the contrast, the FIFO records costs of inventories at a lower cost compared to LIFO; therefore, companies can provide better-looking financial statements. JC Penney as a retail store, the company must record high sales to proof its value to investors; therefore

Target began back in 1902 after the Westminster Presbyterian Church burned down in Minneapolis, MN. George Dayton was a banker and a member of the parish so the other members of the church looked to him to assist with rebuilding. He bought a six story building and went into business with the Reuben Simon Goodfellow Company to have them lease part of the new building. George Dayton acquired the Goodfellow Department store from the owner who retired and in 1910 he renamed it the Dayton Company.

financial statements of certain foreign subsidiaries. This increased net sales by $5.4M in 1984. >Changed depreciation method from accelerated to straight-line, which increased net income for 1984 by $11M. >Reduced Pension Plan Expense by $4.6M >LIFO liquidation increased net income by $2.4M and reduced Net Loss by $15.6M >Increased Bad Debt Reserve by $2.1M >Reduced R&D Expense by more than $7M 11. Accounting statements are used by investors, lenders, customers, employees, and governments in

the lower of cost or market with cost determined on a weighted-average basis (dollar tree 10-k, 2015, p. 34). Dollar General’s inventories are stated at the lower of cost or market with cost determined using the LIFO method (dollar general 10-k, 2015, p. 34). Dollar general recorded a LIFO provision

determine their net purchases by using the cost of goods formula and finally I will calculate their inventory turnover and days sales inventory in comparison to Kohl’s corporation. To start off, the inventory method used by Target is last-in, first-out (LIFO) method. According to Horngrens accounting (2018), under the

Kroger estimates that approximately 95% of their inventories in 2015 were valued using the LIFO method. Cost for the remainder of their inventories, including almost all fuel inventories, was determined using the First in First Out (FIFO) method. Kroger utilizes the Item Cost Method to determine its inventory cost before the LIFO adjustment for their store inventories. The reason Kroger employs the item-cost method of accounting is that it allows Kroger a more

provided to users of financial statements.” (FASB, page 1) The thought process for this update appears to be FASB’s attempt to streamline and simplify the inventory measurement reporting process moving forward. I disagree with their decision to exclude LIFO and the retail inventory method from the amendment. For the retail inventory, at some point during the business

Proposed Accounting Standards Update 2017-210 – Inventory (Topic 330) Summary of Main Points of Proposed ASU 2017-10 Accounting Standards Codification (ASC) 330 provides the provisions mandated by Generally Accepted Accounting Principles (GAAP) for the accounting and disclosure requirements for inventory. Inventory represents products held for resale and has financial significance because it is deemed a current asset on a company’s balance sheet and the reported amount affects cost of goods sold

Processes. According to Targets Annual Report (2017), their inventory method is all inventory and the related cost of sales are accounted for under the retail inventory accounting method (RIM) using the last-in, first-out (LIFO) method. Inventory is stated at the lower of LIFO cost or market.

stated that their inventory method that is currently being used. This method is called: Retail Inventory Accounting Method known as (RIM), this method it is common amongst these types of corporations because of it practicality. Target also uses the LIFO method known as Last-In, Frist-Out, this helps them stay on top of their inventory. Going over the annual report well help decide if this change has help Target to make any more changes After reviewing Target’s 2016 Annual Report, I was able to find

Difference between GAAP and IFRS The GAAP and the IFRS are the two accounting standards that are used by businesses. The IFRS is used in over 120 countries, especially countries in the European Union while the GAAP is used primarily in the United States. Although the two standards serve the same purpose, there are some differences in the way they operate. The most outstanding difference between the two is that while the GAAP is based on rules, the IFRS is based on principles. Unlike a rule based