One of the disadvantages of the LIFO cost flow assumption is the impact of the liquidation of LIFO layers.
Required:
a. Explain what is meant by inventory liquidation under the LIFO cost flow assumption.
a. Inventory liquidation occurs when the number of units sold during a period exceeds the number of units purchased. The result is fewer units in ending
b. Discuss why this may be a serious problem for LIFO but not for FIFO.

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The Answer of One of the disadvantages of the LIFO cost flow assumption is the impact of the liquidation of LIFO layers.
Required:
a. Explain what is meant by inventory liquidation under the LIFO cost flow assumption.
a. Inventory liquidation occurs when the number of units sold during a period exceeds the number of units purchased. The result is fewer units in ending
b. Discuss why this may be a serious problem for LIFO but not for FIFO.

One of the Disadvantages of the LIFO Cost Flow Assumption