Last-in, first-out Are its days finally numbered?
Mar 19, 2009 | 04:32 AM
After seven decades of implementation, the 21st Century has brought some of the most serious challenges for last-in, first-out (Lifo) accounting. But in the long run, its biggest test might be on the international front.
In 2006, Sen. Bill Frisk (R., Tenn.) proposed compensating Americans for rising gasoline costs with a $100 tax rebate. Due to pay-as-you-go budgeting requirements, the cost of the rebate would have been offset by repealing Lifo, a method of accounting that businesses use to help mitigate the impact of inflation on inventory.
This caught the business community "completely by surprise," said Jade C. West, senior vice president of government relations at the National Association of Wholesaler-Distributors (NAW) in Washington, and a hurriedly called weekend meeting of various trade association executives resulted in the formation of the ad hoc Lifo Coalition.
The effort to eliminate Lifo failed—as did an earlier attempt to abolish its use by major oil companies—following a threatened veto by the Bush administration. Unfortunately, the genie was out of the bottle and a potential source of tax revenue that West says is "barely understood" by its critics was in the arsenal of legislators looking for new sources of revenue.....
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