HIFO (Highest In – First Out) refers to a method of stock evaluation in which the goods are stored in a certain way. Here, the goods are stored according to price, so that the expensive goods are removed from the storage first. The stock is therefore valued with the low purchase prices.
HIFO is used to show a high turnover in the balance sheet, whereby the final stock is valued as low during the inventory. In concrete terms, the method is used to reduce taxable income for a certain period. Although HIFO is widely used, the procedure is not permitted under German commercial and tax law.
Other methods are FIFO (First In – First Out), LIFO (Last In – First Out) and LOFO (Lowest In – First Out).
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