Two Reasons Often Advanced for the Adoption of LIFO Inventory

question 62

Essay

Two reasons often advanced for the adoption of LIFO inventory costing for financial reporting are the improved matching of current costs with current revenue during periods of rising prices and the reduction of income tax payments.Nonetheless,the number of companies using LIFO has not increased over the last several years.Some companies actually have switched from LIFO to FIFO over the last several years.
Identify reasons why a company would change from LIFO to FIFO for financial reporting purposes.