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Impact of Inventory Valuation Methods

We discussed the impact of LIFO and FIFO valuation methods on COGS, ending inventory, and gross profits under the increasing prices scenario under inflationary and deflationary scenarios. The following table summarizes the impact of LIFO and FIFO under the inflationary scenario (rising prices).

  FIFO LIFO
COGS Lower Higher
Ending Inventory Higher Lower
Gross Profits Higher Lower

 

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