Last-In, First-Out (LIFO) Method
Accounting glossary · Understand, connect, apply
LIFO, or last-in, first-out, assigns the most recently acquired costs to goods sold first. It is permitted in certain US GAAP circumstances but is not an allowed IAS 2 cost formula under IFRS.
Example
Ten units cost $4 each and a later ten cost $6 each. Selling ten under a simple LIFO example assigns $60 to COGS.
Remember the difference
Specify the reporting framework. A permitted US method is not automatically permitted for IFRS financial statements.
Examples are simplified for learning. Where a term depends on US law, IFRS, US GAAP or a historical rule, check the context explained above and the requirements relevant to your course.
Study references: OpenStax financial accounting and managerial accounting. For reporting requirements, consult the applicable IFRS Standards or FASB guidance. US tax terms should be checked against the relevant tax-year IRS instructions.
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