LIFO lessons learned

Description

Abstract: Many auto dealerships use the last-in, first-out (LIFO) method of valuing their inventories of new and used vehicles, parts, and accessories. Typically, this costing method can save on tax bills. But, for dealers who end the year with inventories far below their normal levels (as was common in 2009), LIFO can be costly. To avoid a tax hit, it’s important to understand when to use LIFO and when to forgo it. This article looks at LIFO’s quirks and examines other common inventory accounting methods.