CFA Level I · CFA Level I Exam · Analysis of Inventories
Which inventory cost formula is prohibited under IFRS?
LIFO is prohibited under IFRS. IAS 2 permits FIFO, weighted average cost and, for unique items, specific identification, but it does not allow last-in, first-out, although US GAAP does.
- ALIFOCorrect
- BFIFO
- CWeighted average cost
Explanation
IAS 2 permits specific identification, FIFO and weighted average cost, and prohibits LIFO. US GAAP allows LIFO.
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