LIFO reserve

A LIFO reserve is a dated bridge between inventory reported under LIFO and a disclosed non-LIFO comparison basis, commonly FIFO. For matched scope, subtract LIFO inventory from the comparison-basis inventory. A positive result means the comparison inventory is higher.

Match the entity, date, inventory population, currency, and comparison method before using the number. Do not combine a consolidated LIFO balance with a reserve for one segment or compare a FIFO estimate from another date. The reserve is not cash, fair value, a damage allowance, or a general correction to inventory.

The ending reserve bridges balance-sheet amounts. The change in reserve bridges one period's cost of goods sold. If the reserve rises by $60, FIFO comparison cost of goods sold is $60 below reported LIFO cost of goods sold before tax and other adjustments. Using the $60 ending balance instead of the $60 change would be valid only when the opening reserve was zero.

ASC 330-10-30-9 identifies the underlying cost-flow assumptions. The inventory-basis disclosure rule appears in ASC 330-10-50-1. Those paragraphs do not make every FIFO-minus-LIFO calculation a disclosed reserve. The comparison still needs entity-specific scope and source evidence.

Use the Cedar reserve bridge before preparing the independent Northstar comparison. Retain tax effects, pool changes, and operating differences as separate adjustments or limits.