Ifrs in Accounting
This is a perfect article for the timing in class. The article questions whether LIFO will stick around much longer. Transportation costs have been a hot topic recent years and people in the industry are trying to eliminate LIFO. This accounting method is still popular amongst some industries because of the tax benefits. Members of congress have debated which accounting method is better for companies, LIFO or FIFO for several years. The main topic for discussion is that LIFO “benefits only a narrow range of businesses” with the tax benefits. Outside of congress, IFRS (International Financial Reporting Standards) is the biggest threat of shutting down LIFO because of the 85 countries that using global accounting principles. IFRS doesn’t allow LIFO and it could impact businesses and the way they conduct their inventories. The United States will continue to monitor the best business practices to ensure that they are in the best interest for American companies.
With more companies shifting from IFRS to GAAP we could see the United States move away from LIFO. The time table to make this happen is undetermined but this is important to think about when we are out in the business world. While LIFO does provide tax benefits we can see that using this method changes the bottom line. This has been a constant debate and it will be interesting to see what way the United States moves. While I think there are some good benefits to LIFO I think FIFO is a better way. As we have learned from our business class, it all depends though.