The formula to convert the cost of goods sold LIFO to an estimate of the cost of goods sold FIFO is

Question

Quizplus · Accepted Answer

To convert cost of goods sold LIFO to an estimate of the cost of goods sold FIFO, we need to subtract the increase in LIFO reserve from the cost of goods sold LIFO. This is because the LIFO reserve represents the difference between the inventory value under LIFO and FIFO, so by subtracting the increase in LIFO reserve, we can estimate what the inventory value would have been under FIFO and thus, what the cost of goods sold FIFO would be.

The Formula to Convert the Cost of Goods Sold LIFO