MANAGEMENT

Detailed explanation-1: -Stock or inventory with the greatest purchasing costs is first to be sold, used, or removed from the inventory count. Written by CFI Team. Updated January 17, 2023.

Detailed explanation-2: -Highest in, first out (HIFO) is a method of accounting for a firm’s inventories wherein the highest cost items are the first to be taken out of stock. HIFO inventory helps a company decrease their taxable income since it will realize the highest cost of goods sold.

Detailed explanation-3: -First In, First Out, commonly known as FIFO, is an asset-management and valuation method in which assets produced or acquired first are sold, used, or disposed of first. For tax purposes, FIFO assumes that assets with the oldest costs are included in the income statement’s cost of goods sold (COGS).

Detailed explanation-4: -Ans. The FIFO method produces the most meaningful inventory amount for the statement of financial position because the units are costed at the most recent purchase prices.

Detailed explanation-5: -FIFO (first-in-first-out), LIFO (last-in-first-out), and HIFO (highest-in-first-out) are simply different methods used to calculate cryptocurrency gains and losses. To better understand how they work, let’s calculate capital gains on the following transaction using each one of these different accounting methods.