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Why would a company's managment decide to liquidate its LIFO inventory layer? What would be the...

Why would a company's managment decide to liquidate its LIFO inventory layer? What would be the benefit (s)?

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Liquidation of LIFO inventory occurs when a company that uses last in , first out inventory costing method liquidate it's older LIFO inventory. LIFO liquidation occurs when current sales exceed purchase , when current sales exceed purchase then this results liquidation of inventory not sold in a previous years .In LIFO inventory company sold most recent inventory which purchased first.Lifo matches the most current cost against current revenue.Some companies in the world uses LIFO method during the inflation when cost to purchase the inventory increase over time . LIFO liquidation provide tax benefits as higher cost associated with new inventory are off set against the profit . And it will result a lower tax burden .

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