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    Why is LIFO prohibited under IFRS standards

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    British Petroleum has been in the news lately and, like most companies in the oil refining business uses process costing. The choices when using process costing are FIFO method or Weighted Average method. International reporting standards (IFRS) prohibit the use of LIFO method. In the not too distant future, American based companies will be converting to IFRS standards. Why is LIFO prohibited? What will happen to the American companies that have been using it?

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    LIFO is prohibited in that it doesn't reflect the cost and physical flow of inventory accurately. Moreover it is also ...

    Solution Summary

    Why LIFO is prohibited under IFRS standards is determined.