As LIFO layers are liquidated,inventory holding gains that were previously ignored are recognized in the period of liquidation.

Question

Quizplus · Accepted Answer

This statement is true. When LIFO layers are liquidated, the inventory that is being sold was typically acquired at a lower cost than current inventory prices. This means that the cost of goods sold is lower, and as a result, the profit margin is higher. These gains in holding inventory are recognized and accounted for in the period of liquidation.

As LIFO Layers Are Liquidated,inventory Holding Gains That Were Previously