US GAAP ASC 330

LIFO (Last-In, First-Out)

Inventory valuation assumption that most recently acquired units are sold first.

Detailed Definition & General Ledger Context

LIFO (Last-In, First-Out) is governed by US GAAP ASC 330 in general ledger financial reporting and fixed asset sub-ledgers. Maintaining accurate records of LIFO (Last-In, First-Out) is vital for audit compliance, asset balance verification, and tax schedule reconciliation.

Mathematical Standard & Equation

            Ending Inventory = Sum of Oldest Inventory Layer Costs
          

General Ledger Journal Entry Standard

            Debit: Inventory Expense Account

            Credit: Inventory Contra-Asset / Payable Liability

Common Operational Pitfalls

Failing to reconcile fixed asset sub-ledgers with the general ledger trial balance monthly.
Conflating IRS MACRS tax depreciation tables with GAAP straight-line financial reporting.
Misclassifying lease obligations under ASC 842 capitalization standards.

Used in these R2R Calculators

Launch Calculator →

Authoritative Source

Source: https://www.fasb.org/ ↗