Also ending inventory is lowest under lifo highest

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Also, Ending Inventory is lowest under LIFO, highest under FIFO, and somewhere in the middle under average cost.
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8-13 When Prices Are Rising . . . LIFO Matches high (newer) costs with current (higher) sales. Inventory is valued based on low (older) cost basis. Results in lower pre- tax income . FIFO Matches low (older) costs with current (higher) sales. Inventory is valued at approximate replacement cost. Results in higher pre-tax income.
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8-14 U. S. GAAP vs. IFRS LIFO is permitted and used by U.S. Companies. If used for income tax reporting, the company must use LIFO for financial reporting. Does not permit the use of LIFO. Because of this restriction, many U.S. multinational companies use LIFO only for domestic inventories. LIFO is an important issue for U.S. multinational companies. Unless the U.S. Congress repeals the LIFO conformity rule, an inability to use LIFO under IFRS will impose a serious impediment to convergence.
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8-15 Many companies use LIFO for tax and external financial reporting purposes. FIFO or average cost for internal reporting purposes. Reasons: 1. Pricing decisions based on FIFO or average cost 2. Record keeping easier and less costly under FIFO or average cost 3. Profit-sharing or bonus arrangements based on FIFO or average cost LIFO Reserve
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8-16 LIFO Reserve is the difference between the inventory method used for internal reporting purposes and LIFO. The LIFO Reserve (or Allowance) account is a contra account to inventory. Example : ABC Company uses FIFO for internal reporting purposes and LIFO for external reporting. On January 1, 2012, ABC had a balance of $10,000 in the LIFO Reserve account. On December 31, 2012 it had the following: LIFO Reserve FIFO ending inventory $160,000 LIFO ending inventory 135,000 LIFO Reserve $ 25,000 Cost of goods sold ($25,000 – 10,000) 15,000 LIFO Reserve 15,000 Journal entry to record the increase in the reserve: C o m panie s  s ho uld dis c lo s e  e ithe r the  LIFO  re s e rve  o r the  re plac e m e nt c o s t  o f the  inve nto ry.
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8-17 LIFO Liquidation LIFO inventory costs in the balance
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