There are four main ways for asset valuation:

[mstakh.i.mo.mi]

FIFO (First In, First Out)
You assume you’re selling your oldest inventory first. Since prices usually go up over time, a firm using the FIFO method sells its cheapest products first. This makes your COGS look lower and your profits higher. With FIFO, the net income increases over time.

LIFO (Last In, First Out)
The newest stuff goes first, in the LIFO method. In rising markets, you sell the peru phone number list most expensive goods first, this bumps up COGS and shrinks your profits on paper. Over time, while using the LIFO method, your net income likely decreases.

Average Cost
If you can’t decide between FIFO and LIFO, just take the average! You determine the cost of goods sold by accounting for the average price of all inventory in stock, regardless of its purchase date. It smooths everything out, so one expensive purchase or acquisition doesn’t impair your business.

Special Identification
The special identification technique is for the fancy stuff. If you’re selling things like Ferraris or diamonds, you’ll probably use this method. It’s like keeping a detailed diary of every item – when you bought it, for how much, and when you sold it. The method uses the cost of each merchandise unit to calculate the ending inventory and cost of goods sold for each period.