Because IFRS do not permit the use of LIFO,inventory holding gains are included in income.

Question

Quizplus · Accepted Answer

IFRS prohibits the use of Last-In, First-Out (LIFO) accounting method for inventory valuation. Under LIFO, the cost of the latest goods purchased or produced is matched with the revenue from the latest sales, resulting in a lower profit margin during times of inflation. Since IFRS does not allow LIFO, companies must use other methods such as First-In, First-Out (FIFO) or weighted average cost accounting, which may result in inventory holding gains being included in income. Thus, the statement is true.

Because IFRS Do Not Permit the Use of LIFO,inventory Holding