?

Financial Accounting

Free Version

Upgrade subject to access all content

Moderate

Inventory Valuation: Income Tax Effect

FINACT-RPJOGY

Some companies use the First-In, First-Out (FIFO) Inventory valuation method while others use the Last-In, First-Out (LIFO) Inventory valuation method.

When filing an income tax return, a company will prefer the

Inventory valuation method during times of price inflation, because the amount of net income is

than when using the

Inventory valuation method.