International Financial Reporting Standards (IFRS) do not permitcompanies to use the LIFO method for...

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Accounting

International Financial Reporting Standards (IFRS) do not permitcompanies to use the LIFO method for inventory accounting. In itsform 20-F, CNH discloses that it uses the first-in-first-out (FIFO)method to accounting for its inventory. Assume that prices thatCaterpillar and CNH pay for inventory typically increase over time.In general terms, how does each company’s inventory accountingmethod affect its balance sheet and income statement? How would thechoice between LIFO and FIFO affect the statement of cash flows, ifat all? What if prices typically decrease over time?

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In general there are two inventory accounting methods They are FIFO First in First Out and LIFO Last in First Out Effect of LIFO on balance sheet and income statement When prices increase the recent See Answer

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In: AccountingInternational Financial Reporting Standards (IFRS) do not permitcompanies to use the LIFO method for inventory...International Financial Reporting Standards (IFRS) do not permitcompanies to use the LIFO method for inventory accounting. In itsform 20-F, CNH discloses that it uses the first-in-first-out (FIFO)method to accounting for its inventory. Assume that prices thatCaterpillar and CNH pay for inventory typically increase over time.In general terms, how does each company’s inventory accountingmethod affect its balance sheet and income statement? How would thechoice between LIFO and FIFO affect the statement of cash flows, ifat all? What if prices typically decrease over time?