Discusses the advantages and disadvantages of alternative assumptions flow of goods in the United States admitted. A single exhibit shows that in year 2, a company with LIFO in Year 1 may be reported higher net income by switching to FIFO at a cost of higher taxes. Circlip LIFO would save taxes, but lead to lower reported earnings. A rewritten version of an earlier note.

Discusses the advantages and disadvantages of alternative assumptions flow of goods in the United States admitted. A single exhibit shows that in year 2, a company with LIFO in Year 1 may be reported higher net income by switching to FIFO at a cost of higher taxes. Circlip LIFO would save taxes, but lead to lower reported earnings. A rewritten version of an earlier note.
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William J. Bruns Jr.,
Sharon Bruns
3 pages.
Publication Date: Jun 10, 2004. Prod #: 104087-PDF-ENG
The issue of LIFO or FIFO, what is preferred? HBR case solution