When prices rise, LIFO gives a higher cost of goods sold and lower taxable profit than FIFO. LIFO is allowed under U.S. GAAP (with the LIFO conformity rule for taxes) but not under IFRS. Everything is calculated in your browser, so nothing you type is sent to our server.
How to use the LIFO Calculator for Inventory
- Method
- Units in each purchase (oldest first)
- Cost per unit of each purchase
- Units sold
- Selling price per unit
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How it works
Enter the units and unit cost of each purchase in date order (separated by commas), the units sold and the selling price.
Formula
LIFO: units sold are costed from the latest purchases first
COGS = Σ (units taken from each lot × lot cost)
Ending inventory = total purchases − COGS
Worked example
Inputs: Method: LIFO – last in, first out; Units in each purchase (oldest first): 100, 150, 120; Cost per unit of each purchase: 10, 12, 13; Units sold: 260; Selling price per unit: $20.
Results: Units available = 370; Total cost of goods available = $4,360; Cost of goods sold = $3,240; Ending inventory value = $1,120; Units left = 110; Revenue = $5,200.
Frequently asked questions
What is LIFO?
Last in, first out: the newest stock is treated as sold first.
Is LIFO allowed under IFRS?
No, only under U.S. GAAP.
Why do companies use LIFO?
In inflation it raises COGS and lowers taxable income.