kasinkei

Algebraically the numbers work, but think about it in terms of what is reported and how/why you would do the calculation.

If your goal is to make companies with different reporting methods comparable and you want to convert a FIFO firm's statements to the equivalent LIFO you would need additional information that I don't think is presented in their statements. A FIFO firm would not report what their COGS/Inv Balance would have been under LIFO or a LIFO reserve. Therefore, it does not make sense to test the theory/application in this manner because it would not be used.