John Kostolansky

Abstract

Recent legislative consideration to end the use of the Last-in, First-out (LIFO) inventory method, as well as the movement to adopt international accounting standards which do not permit LIFO, have created anew the debate over how important LIFO is to U.S. businesses. This paper catalogs the use of LIFO during 2007 among the largest 500 U.S. companies by analyzing disclosures from the Form 10-K annual report (or the corporate annual report for privately-held firms). Analysis of the data provides evidence of the frequency of use of LIFO, the financial impact on reported income and on reported assets due to its use, and the particular industry categories that are the major beneficiaries of the method.