Inventory

One-minute revision

• Rising prices: FIFO → higher NI; LIFO → lower NI (and lower tax)
• LIFO allowed under US GAAP, not IFRS; LIFO conformity rule ties tax and book use
• FIFO/weighted average → LCNRV (NRV = selling price − completion/disposal costs)
• LIFO/retail → LCM, bounded by ceiling (NRV) and floor (NRV − normal profit)
• Freight-in → inventory cost; freight-out → selling expense