ACCA Applied Knowledge · Financial Accounting · Inventories
Which one of the following inventory costing methods is NOT permitted under IAS 2 Inventories?
LIFO is not permitted under IAS 2. The standard allows FIFO and weighted average cost formulas, and also permits standard cost or retail methods as measurement techniques where the result approximates actual cost, but it prohibits last-in, first-out.
- AFirst-in, first-out (FIFO)
- BWeighted average cost
- CLast-in, first-out (LIFO)Correct
- DStandard cost, where it approximates actual cost
Explanation
IAS 2 permits FIFO and weighted average cost as cost formulas, and techniques such as standard cost where results approximate cost. LIFO was prohibited by the standard. The other three options are therefore acceptable.
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