If a company uses the LIFO inventory method to report the cost of inventory and cost of goods sold on its financial statements, footnote disclosure of the income as calculated by the FIFO method does not violate the tax and financial accounting conformity requirement.

Question

Quizplus · Accepted Answer

Footnote disclosure of income calculated by the FIFO method does not violate the tax and financial accounting conformity requirement, even if the company uses LIFO for financial reporting. This is because tax rules do not require a specific inventory method to be used for financial reporting, and companies are allowed to use different methods for tax and financial reporting purposes.

If a Company Uses the LIFO Inventory Method to Report