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Lifo

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(Querist)
28 September 2017 Is there any real advantage in using LIFO method of inventory tracking as it only help to inflate profits in the beginning years (by showing higher costs of goods sold) and later on we have to show the older costs during an inventory liquidation? I guess that advantages of initial lower taxes will be offset by higher taxes later on.
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Dinesh Jain

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Dinesh Jain (Expert)
28 September 2017 The only benefit is that your sales price would be more or less closer to the current price and hence price movement may not impact profits materially. Also ur view can only work if price is continuously increasing. On the contrary if price reduces then ur point of view won't work.. So the real benefit is that it shows realistic profit and stable profit.
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Dinesh Jain

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Dinesh Jain (Expert)
28 September 2017 The only benefit is that your sales price would be more or less closer to the current price and hence price movement may not impact profits materially. Also ur view can only work if price is continuously increasing. On the contrary if price reduces then ur point of view won't work.. So the real benefit is that it shows realistic profit and stable profit.
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