The LIFO, IFRS Conversion: An Explosive Concoction

6 Pages Posted: 18 Jan 2010

See all articles by Rodney P. Mock

Rodney P. Mock

California State Polytechnic University, San Luis Obispo - Orfalea College of Business

Andreas Simon

Pepperdine University - Graziadio Business School

Date Written: May 11, 2009

Abstract

This article reviews the tax recognition issue associated a firm’s abandonment of, or federal tax disqualification from, using the “last-in, first-out” method of inventory accounting in light of the recent Securities and Exchange Commission movement towards requiring American publicly traded corporations to report under International Financial Reporting Standards. The article pays particular attention to the significant LIFO reserves accumulated in the manufacturing, chemical, automotive and energy sectors, and conducts a tax policy analysis of the ramifications of such a conversion, and suggests possible solutions such as the elimination of the Internal Revenue Code’s conformity requirement and/or extended deferral of gain recognition.

Keywords: LIFO, FIFO, IFRS, international financial reporting standards, conversion, last-in, first out, first-in, last-out, recognition, conformity requirement

Suggested Citation

Mock, Rodney P. and Simon, Andreas, The LIFO, IFRS Conversion: An Explosive Concoction (May 11, 2009). Tax Notes, Vol. 123, No. 741, 2009, Available at SSRN: https://ssrn.com/abstract=1536815

Rodney P. Mock (Contact Author)

California State Polytechnic University, San Luis Obispo - Orfalea College of Business ( email )

San Luis Obispo, CA 93407
United States

Andreas Simon

Pepperdine University - Graziadio Business School ( email )

Malibu, CA
United States

HOME PAGE: http://https://bschool.pepperdine.edu/academics/faculty/andreas-simon/

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