1. a method of handling inventory costs at the price of the earliest items, assuming that items purchased last will be sold first. Abbr.:LIFO Compare first-in, first-out.
Adjusted earnings before interest, taxes, depreciation and amortization, LIFO, lease termination and impairment charges, and other items (EBITDA) fell 26.5% to $274.1 million, or 3.39% of revenue, down 119 basis points from a year ago.
The most recent quarter included an after-tax (all figures are net of tax) LIFO charge of $64 million; $3.62 million in acquisition-related intangibles amortization expense; and $1.22 million for employee severance, litigation and other expense, all slightly countered by a $488,000 gain on an antitrust litigation settlement and a $652,000 credit against warrant expense.
In the letter to Congress, industry proponents claim LIFO is an appropriate means of evaluating inventory and its repeal would significantly and permanently harm many businesses, including metalcasting facilities.
If the inventory items are specific and separately identifiable, the costs can be uniquely allotted, but if the inventory items are identical and interchangeable, then an assumption of the flow of costs can be made--first-in, first-out (FIFO), average costs, or LIFO. The method chosen should be the one that best reflects income.
A recent CPA Journal article discussed the financial and tax effects when a company discontinues using LIFO, why companies might voluntary switch from LIFO to another inventory method, and strategies that a company should consider when timing the switch (Linda Hughen, Jane R Livingstone, and David Upton, "Switching from LIFO: Strategies for Change, "April 2011, pp.
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