A firm can use LIFO for computing cost of goods sold for tax purposes only if it uses LIFO for financial reporting purposes.

Question

Quizplus · Accepted Answer

This is true according to the generally accepted accounting principles (GAAP). The IRS requires that a company use the same accounting method for tax purposes and financial reporting purposes. Therefore, if a company uses LIFO for financial reporting purposes, they must also use LIFO for tax purposes.

A Firm Can Use LIFO for Computing Cost of Goods