US CMA Part 2 · Chapter 2 · Question 15 of 15
Which inventory cost flow method is permitted under US GAAP but prohibited under IFRS?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Last-in, first-out (LIFO)
Explanation
US GAAP permits LIFO, but IFRS (IAS 2) prohibits it. FIFO, weighted average and specific identification are permitted under both frameworks. Analysts comparing a US GAAP LIFO company with an IFRS company should restate inventory and cost of goods sold to a common basis.
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