There are two basic accounting methods to compute the value of inventories, LIFO and FIFO. As much as this sounds like a pair of poodles, LIFO actually stands for “last in, first out,” and FIFO stands for “first in, and first out.” If Handy and Harman bought some gold thirty years ago for $40 an ounce, and yesterday they bought some gold for $400 an ounce, and today they sell some gold for $450 an ounce, then what is the profit? Under LIFO, it’s $50 ($450 minus $400), and under FIFO it’s $410 ($450 minus $40).
