IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this article

Should Last In First Out Inventory Valuation Methods Be Eliminated?

Listed author(s):
  • Peter Harris
Registered author(s):

    The Last in First out Method (LIFO) is presently under severe scrutiny from the financial community which may soon culminate in its repeal as an acceptable accounting method. There are pressures from the SEC in conjunction with the International Financial Accounting Standards Board to standardize accounting standards worldwide. In addition, there is political pressure imposed by the US Obama administration to raise additional revenues. Both groups strongly oppose LIFO, raising a strong possibility that’s its complete elimination as an accounting method will occur by as early as 2014. Are these groups correct in their negative assessment of LIFO? This paper examines critically the many disadvantages of LIFO. Ultimately, the author theorizes that these negatives may collectively explain the observed research findings of the inverse relationship between LIFO adoption and firm value. The elimination of LIFO which seems imminent may result in a win-win situation for all; as the negative and added costs of LIFO may well exceed its tax advantage, resulting in greater cash flow for the firm, while allowing for the standardization of worldwide accounting standards and raising additional tax revenue for the US government.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL: http://www.theibfr2.com/public_ftp/RePEc/IBF/gjbres/gjbr-v5n4-2011/gjbr-v5n4-2011-5.pdf
    Download Restriction: no

    Article provided by The Institute for Business and Finance Research in its journal Global Journal of Business Research.

    Volume (Year): 5 (2011)
    Issue (Month): 4 ()
    Pages: 53-67

    as
    in new window

    Handle: RePEc:ibf:gjbres:v:5:y:2011:i:4:p:53-67
    Contact details of provider:

    No references listed on IDEAS
    You can help add them by filling out this form.

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:ibf:gjbres:v:5:y:2011:i:4:p:53-67. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mercedes Jalbert)

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.