Inventory of merchandising companies:

Some companies have difficulty valuing inventory due to the type of inventory held, e.g. grocery stores or Future Shop.



FIFO

Company calculates the total inventory sold & subtracts this amount from the first items of inventory purchased.



LIFO

Like the name suggests.



Average cost

The average cost of all inventory is used.



Specific unit

A company can actually identify which units are sold or left on hand fun inventory valuation, i.e. antique car dealership.



LCM

Companies will value their inventory @ the lower market price, i.e. PCs that become obsolete due to advances in the hi-tech frontier are no longer worth the price the company paid for them. Famous pessimistic accountants mantra: "We assume all losses & no gains".