What is the preferred inventory method under IFRS.
fifo, lifo is prohibited
Its not FIFO. I selected FIFO in the sample exam and got it wrong. The correct answer was “Specific Identification”. I have no clue about it.
Well, the “specific identification” method is the most accurate as you record every single inventory costs and revenue price. It is the most accurate, however the most common used is the FIFO. It this sense. the specific identification method is the preferred one, but not the most common
Specific identification is basically impossible to implement unless you are a company creating a very small number of items… say a luxery good company that makes 10 boats a year or something. It would be a nightmare to managed and report for a widget producer.
Additionally specific identification makes no sense if the inventory is similar. Only when the inventory items are different and it is possible to individually identify and track every item, specific inventory is used …