US CMA Part 1 · Chapter 1 · Question 4 of 23
Which inventory cost flow assumption is permitted under US GAAP but prohibited under IFRS?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Last-in, first-out (LIFO)
Explanation
IAS 2 prohibits LIFO, while US GAAP still permits it. FIFO and weighted-average cost are allowed under both frameworks, and specific identification is permitted under both (IAS 2 requires it for items that are not ordinarily interchangeable).
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