LIFO Liquidation

LIFO Liquidation

A situation in which a company using LIFO accounting sells its oldest inventory. Under LIFO accounting, inventory purchased last is treated as if it is sold first. Thus, LIFO liquidation occurs when a company appears to sell the inventory it purchased first. This may not be the actual inventory it purchased first but is treated as such for accounting purposes. LIFO liquidation happens when the company's sales outpace its purchases for inventory.
References in periodicals archive ?
Often, LIFO layers are recorded at a lower cost than current purchases and LIFO liquidation via inventory reduction has the effect of lowering COGS and increasing income.
However, the absorption costing effect of lowering income, along with other implementation costs, is opposite to the LIFO liquidation effect of increasing income.
Further, and very significantly, the LIFO transgression is "buried" in prior layers, provided that a LIFO liquidation does not occur after the method change has been effected.
17) LIFO liquidations can always be "managed" to accommodate or mitigate undesirable tax consequences.
Included in Table 3 is the LIFO liquidation or reduction for 1993.
Our 2011 operating income was at a record level despite the unfavorable impacts from rapidly declining metal prices experienced in the third quarter and the lack of a LIFO liquidation in 2011 compared to 2010," said Rodney D.
This increase was due to plant operating efficiencies, lower selling and administrative expenses, a LIFO liquidation impact in 2009 and the absence in 2009 of: the LIFO cost of sales impact of rapidly declining copper prices, the impact of the acquired Global Wire inventories on the Company's existing LIFO inventories, and increased scrap losses from declining metals prices.
This LIFO liquidation resulted in a decrease in costs of sales of $138 million.
Significant unusual adjustments that occurred in the nine months ended September 30, 2008 were the LIFO liquidation gain of $2.
1 million primarily due to a reduced LIFO liquidation impact of $3.
0 million gain on a LIFO liquidation related to the sale of the Company's pharmaceutical warehouse inventory to AmeriSource Corp.
Production Equipment Group's results for the quarter were below last year's because of a decline in LIFO liquidations between quarters.