Free CFA Video: Last-in-First-out (LIFO) to First-in-First-out (FIFO) Conversion

Question:

A company is reporting using LIFO. The beginning inventory was $50M and ending inventory was $60M. If it were reported in FIFO, then the beginning and ending inventories would have been $55M and $65M respectively.

It reports that the COGS was $10M. What would the COGS in FIFO reporting be?

Answer:

FIFO inventory

= LIFO inventory + LIFO reserve

FIFO COGS

= LIFO COGS – change of (LIFO reserve)