INVENTORY VALUATION METHODS UNDER GAAP

Question

Can you name the inventory valuation methods acceptable under GAAP?

Answer 1

There are four inventory valuation methods acceptable under GAAP (Generally Accepted Accounting Principles): Specific Identification, Weighted Average, FIFO and LIFO.

The important difference from IFRS (International Financial Reporting Standards), is that LIFO is not allowed.

US companies follow GAAP for the strict guidelines, but while comparing to global companies may need to show conversion such as LIFO to FIFO, since LIFO is not allowed under IFRS.