The ending inventory would be calculated the following way:Number of unitsPrice per unitTotalRemaining 90 units$50$4500 ($50 x 90 units)Total$4500The balance sheet would show $4500 in inventory under LIFO.The difference between the cost of an inventory calculated under the FIFO and LIFO methods is called the LIFO reserve (in the example above, it is $750). Under LIFO, the total cost of sales for November would be $11,800.
Section 472 of the directs how LIFO may be used.In the example above, the company (Foo Co.) (using LIFO accounting) would expense the cost associated with the first 75 units at $59, 125 more units at $55, and the remaining 10 units at $50.
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