Assume that a company is experiencing increasing inventory prices and prepares its financial statements in accordance with IFRS. Which costing method should it use to pay the least amount of taxes? Explain your answer
If a company prepares its financial statements in accordance with IFRS, it is not allowed to use LIFO which would result in the lowest amount of taxes as inventory costs are increasing. Under IFRS, LIFO cannot be used; so the weighted average method will result in the largest cost of goods sold, the lowest income, and consequently the lowest income tax for the company.
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