Can i use both lifo and fifo

This might be good for financial reporting, as it emphasizes your profitability, but is not so good for tax reporting because it creates higher taxable income. A money-saving tactic is to select FIFO for your financial reporting and last-in-first-out for taxes. In normal economic conditions, using LIFO for your tax reporting minimizes your taxable income. Another set of choices involves how you will value inventory for financial reporting and taxes.

Under the cost method, you assign value to your inventory based on its purchase cost, adjusted for discounts; transportation; and other charges. If you manufacture your inventory, include direct costs and all associated indirect costs.

Under the retail method, you calculate your COGS as a percentage of your sales revenue, then calculate ending inventory using the inventory equation. You can unsubscribe at any time by contacting us at help freshbooks.

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Review our cookies information for more details. Get more great content in your Inbox. Optional cookies and other technologies. I Accept No, Thank You. Agree Disagree. Weighted avg and then a FIFO basis in another entity , but it is driven more by the way the company grew acquisition , and not having a corp group that really drives any changes after the mergers…Not saying it is a red-flag, but could mean they are somewhat decentralized that is our case.

I was going to float the acquisitions hypothesis. If a company using LIFO acquires a company that uses FIFO, it could take a long time for inventories to be readjusted to a single system, or it might never happen. In the grand scheme of things it isnt so critical as well, if you are buying into different countries you could have some statutory hurdles to jump through.