The LIFO accounting
method for inventories was first permitted in the Revenue Act of 1938 and was quickly extended to all taxpayers in the Internal Revenue Code of 1939.
However, after excluding both fuel sales and the effect of the LIFO accounting
change described above, gross margin was essentially flat year-to-year.
Many firms that experienced significant inventory inflation during the 40 years following World War II failed to adopt LIFO accounting
Further, simplified LIFO also simplifies the LIFO accounting
process and allows a company to control its inventory costs better than its competitors.
requires the company to recognize the higher raw material prices immediately.
In addition, the Company expects its reported earnings per share for the first quarter of 2010 to increase as a result of the lower average cost of raw materials, primarily metals, under the average cost accounting method as compared to the value that would be used for the first quarter under the Company's historical LIFO accounting
The theory goes that LIFO accounting
can lead to old inventory hanging on the balance sheet.
tax law requires LIFO accounting
for financial reporting purposes, if LIFO is elected for tax purposes.
There's good news for companies seeking practical and cost-effective ways to deal with the difficulties of Lifo accounting
The "problem" occasioned by MSF's impermissible LIFO accounting
existed only in those years in which a LIFO increment was created.
Our employees responded to a very aggressive challenge issued at the beginning of the year to reach a goal of $96 million in pretax earnings before the effects of LIFO accounting
In addition, the cash tax deferral benefits of the LIFO accounting
method largely have been eliminated by the year-over-year lower resin prices in 2009.