Come international convergence, LIFO’s days are numbered.
“Many internationals consider U.S. use of LIFO for financial reporting purposes to be ridiculous and absurd,” says Prof. David Albrecht here. “Their dislike is of it seems to be so strongly held that it approaches religious fervor.”
Albrecht goes to the history:
LIFO was initially put forth as a way of minimizing taxes after the imposition of the first federal income tax. The baseline rate of 1% met with much complaint on the part of American citizens. U.S. law insists that use of the tax deduction be mirrored in financial reporting. Except for that, there is no hue and cry on the part of U.S. corporations for its continued use in financial reporting. The law could be changed (and I have heard that a change is reasonably possible) to permit continued use of the tax deduction but no longer require its mirrored use in financial statements if IFRS are adopted by the SEC.
“Personally, I think that perpetual LIFO is the single most ridiculous part of financial reporting,” Albrecht says, adding:
It is also reasonably possible that LIFO could be discontinued for tax purposes. If it is discontinued, it will be because some governmental officials have decided not to offer that particular deduction any more. Given that Prez Obama is about to ring up a nearly 2 trillion deficit and is about to hike taxes up to the nanosphere, perhaps he will move for LIFO elimination.  The timing has never been better to discontinue LIFO in the United States.
via The Summa
