LIFO Tax Incentive Opportunities Abound LIFO is the most valuable inventory-related tax incentive for companies with inflation. LIFOPro publishes our top LIFO candidates blog annually at the end of the year to help CPA firms & companies considering electing LIFO both identify if they’re a good LIFO candidate and if the current inflation environment favors […]
How LIFO Works The LIFO inventory method matches current period revenues with the most recent period’s costs to provide a better measure of current earnings when there is inflation. The LIFO method transfers the inflationary portion of the ending inventory balance from the balance sheet to the income statement via cost of goods sold. When […]
Defining Good LIFO Candidates When weighing the costs & benefits of using the LIFO method, the following factors are key in determining if a company is a good LIFO candidate Inflation rate – When working with companies to determine if they’re a good LIFO candidate, we look for a historical average annual inflation greater than […]
The Bureau of Labor Statistics (BLS) released February 2020 Consumer Price Indexes (CPI) today. The All commodities index increased by 0.3% over the last month & has increased 2.3% over the last year on a seasonally unadjusted basis. All items less food and energy increased by 0.5% between January 2020 – February 2020 & rose […]
The Bureau of Labor Statistics (BLS) released January 2020 Producer Price Indexes (PPI) today. All commodities saw an increase of 0.2% over the last month and increase of 0.1% over the last year. Bolts, nuts, screws, rivets and washers increased by 1.8% over the last month & rose by 6.4% over the last year. From December […]
The Bureau of Labor Statistics (BLS) released January 2020 Consumer Price Indexes (CPI) today. The All commodities index increased by 0.4% over the last month & has increased 2.5% over the last year on a seasonally unadjusted basis. All items less food and energy increased by .04% between December ’19 – January 2020 & rose […]
For companies on LIFO, the LIFO reserve represents the difference between their ending inventory balance at FIFO or average cost (commonly referred to as “current year cost) vs. LIFO cost (for dollar-value LIFO calculations, a non-LIFO costing method must be used to track inventory costs throughout the year in order to determine the “pre-LIFO” ending […]
When providing LIFO Election Benefit Analysis results to companies looking to determine the potential benefits of LIFO, we use Producer Price Index (PPI) inflation tracked by the Bureau of Labor Statistics (BLS) to determine the historical inflation the most predominant items within a businesses’ product mix. When a company’s internal price changes are significantly different […]
What’s Changed Since our Top 50 List was Published in October? In October, we released a Top 50 LIFO candidates list that used inflation rates for the 9 months ended September 2019. As of last Wednesday, December 2019 Producer Price Indexes (PPI) were published and the books have now been closed on inflation rates for […]
Most accounting systems track inventory costs using FIFO or moving average cost. The same can be said for companies on LIFO, but adjustments are obviously required to convert FIFO or average cost to LIFO. The most widely-used and accepted approach to make a link-chain LIFO calculation is what one could call a single index method. […]
LIFO-PRO releases this list of the top 50 LIFO candidates annually in October following the Bureau of Labor Statistics (BLS) releasing September Producer Price Indexes (PPI). This allows for the best LIFO candidates to be identified in advance keeping in mind that considering a LIFO election typically requires prior planning and buy in from the […]
The Bureau of Labor Statistics (BLS) released September 2019 Producer Price Indexes (PPI) today. The Bureau of Labor Statistics (BLS) released September 2019 Producer Price Indexes (PPI) today. The All commodities index declined by 0.6% over the last month & has decreased by 2.7% over the last year on a seasonally unadjusted basis. Meats […]
