LIFO reserve

Definition

The difference between FIFO inventory and LIFO inventory. The figure indicates how much a company's taxable income has been reduced by using the LIFO accounting method rather than the FIFO accounting method. As prices for goods and materials rise, the LIFO reserve will also rise.

Use LIFO reserve in a sentence

The LIFO reserve was evidence of our decreased tax burden experienced as a result of not using the FIFO inventory method.

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The lifo reserve was really fun to learn about and me and my friend wanted to see it in action, so we could see how it all worked in real life.

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After calculating their LIFO Reserve, they realized that the material costs had been increasing and therefore the products now being produced cost more than the prior products.

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LIFO lift a leg