LIFO procedure

Materials Management (MM)

Stock valuation procedure for balance sheet purposes.

With the LIFO procedure, stocks are valuated on a separate basis for each fiscal year.

If the stock level at the end of the fiscal year is greater than that at the start of the year, a so-called layer (valuation layer) is formed in respect of the increase.

If the stock level at the end of the fiscal year is smaller than that at the start of the year, the layers of preceding years are reduced or dissolved, beginning with the last layer to be created.