Lifo Conformity Rule. The purpose of the lifo conformity requirement is to ensure that taxpayers not use the lifo method for tax purposes unless that method conforms as nearly as possible to the best accounting practice in the taxpayer’s trade or business. However, this conformity rule only applies in the us and for companies that use the us gaap.
Switching to lifo may reduce your tax bill, but it could also depress your current earnings and reduce the value of inventories on your balance sheet, thus giving the appearance of a weaker. However, this conformity rule only applies in the us and for companies that use the us gaap. So while the taxpayer was prohibited by ifrs from using lifo, lifo conformity rules state that a taxpayer cannot use an inventory method other than lifo if it has already elected to use lifo.
Today's CPA Sep/Oct 2017 by Issuu
The purpose of the lifo conformity requirement is to ensure that taxpayers not use the lifo method for tax purposes unless that method conforms as nearly as possible to the best accounting practice in the taxpayer’s trade or business. So while the taxpayer was prohibited by ifrs from using lifo, lifo conformity rules state that a taxpayer cannot use an inventory method other than lifo if it has already elected to use lifo. A rule that requires that the same inventory cost flow be used on the financial statements as is used on the income tax return. The lifo conformity rule is a directive given by the internal revenue service of the united states;
