My head is still cloudy in this part… So What is exactly LIFO Effect? Is it the summation of LIFO liquidation and LIFO Reserve???
COGS(F) = COGS(L) - Change in LIFO Reserve *Change in LIFO Reserve = LIFO Effect COGS(F) = COGS(L) - LIFO Effect LIFO Effect = LIFO Reserve(end.) - LIFO Reserve(beg.) “The change in LIFO reserve during the year, sometimes calls the LIFO effect for the year, is thus the difference between the COGS computed un the two methods.” CFAI Volume #3; Page 314; Example 2
Thx, Patrick. So LIFO Effect equates change in LIFO Reserve. Cool!