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The inventory value as of the end of March is $540.
The inventory value as of the end of March is $540.
On April 1 the Eagles Landing Garden Club purchases five units of SuperPlant. Under FIFO, five items are removed at $10 (the oldest cost), the remaining inventory is valued as follows: (5 units x $10) + (15 units x $12) + (15 units x $14) = $440.
On April 1 the Eagles Landing Garden Club purchases five units of SuperPlant. Under FIFO, the five items sold are removed at $10 each (the oldest cost); the remaining inventory is valued as follows: (10 units x $10) + (15 units x $12) + (15 units x $14) = $490.
==LIFO==
Under LIFO, items are removed from inventory based on the oldest purchase cost shown in the accounting records.
This method was very popular since, due to inflation, it tends to reduce income for tax purposes. LIFO is still allowable for reporting purposes under United States Generally Accepted Accounting Principles and for tax purposes, but under international accounting rules it is no longer allowable.
===Example===
Using the garden center example above, under LIFO the five items sold are removed at $14 each (the newest cost); the remaining inventory is valued as follows: (15 units x $10) + (15 units x $12) + (10 units x $14) = $470.
[[Category:Accounting]]
[[Category:Accounting]]