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Generally, the oldest unsold or unutilized inventory items are classified as obsolete either partly or fully. Also, for certain deteriorating items the organisation would use them first to prevent deterioration.
The accounting treatment for obsolete inventory is to write off amounts which impacts bottom line.
However this premise may vary for some industries and certain types of products, eg. Wine... where appropriate batch is identified at the time of sale and accounted accordingly.
In conclusion, generally FIFO is preferred but the choice of which method to use in business is dependent on the nature of the item of inventory and the industry.
Hope this helps!
Cheers...
What else can I help you with?
What is LIFO method?
what is the difference beyween lifo and fifo
Inventory aging system based on FIFO and LIFO method?
FIFO First in first out LIFO Last in last out
What is fifo lifo?
Lifo Fifo
Why does net income change with the FIFO?
FIFO (first in first out) is a method of account for inventory. With FIFO, if inventory costs are increasing your cost of goods sold will be lower than under the LIFO (last in first out) method. If inventory costs are increasing, FIFO will result in higher net income (lower COGS) than LIFO. If inventory costs are decreasing, FIFO will result in lower net income (higher COGS) than LIFO.
Is the moving average inventory method GAAP?
Moving average inventory method is not GAAP (generally accepted accounting principles). LIFO (last in, first out) or FIFO (first in, first out) are GAAP. FIFO is the most common method and easy to compute; however LIFO may be used but is much more complicated to compute unless your businesses computer system computes the LIFO computation.
Does Target use the lifo fifo or average-cost inventory method?
fifo
What is LIFO method?
what is the difference beyween lifo and fifo
Inventory aging system based on FIFO and LIFO method?
FIFO First in first out LIFO Last in last out
What is fifo lifo?
Lifo Fifo
Why does net income change with the FIFO?
FIFO (first in first out) is a method of account for inventory. With FIFO, if inventory costs are increasing your cost of goods sold will be lower than under the LIFO (last in first out) method. If inventory costs are increasing, FIFO will result in higher net income (lower COGS) than LIFO. If inventory costs are decreasing, FIFO will result in lower net income (higher COGS) than LIFO.
What are the new approaches used in cost accounting?
cost of production report lifo method fifo method
How do you calculate lifo reserve?
The LIFO reserve is calculated by taking the difference between the inventory reported under the Last In, First Out (LIFO) method and the inventory that would have been reported under the First In, First Out (FIFO) method. It reflects the amount by which LIFO inventory is less than FIFO inventory. To calculate it, you subtract the LIFO inventory balance from the FIFO inventory balance at the end of a reporting period. This reserve is important for understanding the tax implications and financial health of a company using LIFO accounting.
What stock valuation method is acceptable according to the accounting standard?
they are twoo: FIFO and LIFO
Is Lowe's a lifo or fifo company?
FIFO
Does best buy use FIFO or LIFO?
FIFO motherfoocker
Is the moving average inventory method GAAP?
Moving average inventory method is not GAAP (generally accepted accounting principles). LIFO (last in, first out) or FIFO (first in, first out) are GAAP. FIFO is the most common method and easy to compute; however LIFO may be used but is much more complicated to compute unless your businesses computer system computes the LIFO computation.
Why does LIFO order follows in stack and why does FIFO order follows in queue?
LIFO and stack are synonyms, so are FIFO and queue.
