Below are the company’s sales and purchases transactions for the year 2020. January 1, 2020Opening inventory£0February 5, 2020 Purchases 16,000 units at £3 per unit April 8, 2020Purchases 8,000 units at £4 per unit May 11, 2020Sold 20,000 units at £8 per unit July 15, 2020Purchases 16,000 units at £5 per unit August 20, 2020Sold 12,000 units at £8 per unit September 30, 2020Sold 5,000 units at £8 per unit Required:
a.Using the LIFO inventory-costing method calculate closing inventory in units and £(pounds) for each of the dates given.
b.You have been told that when the FIFO method was applied to the same data given in question a.above, the closing inventory value was about 15% higher.
Briefly explain why there are differences in the two closing inventory values for the two methods and why LIFO is not allowed under IFRS.
