LIFO = last in, first out
Procedure for balance sheet valuation.
With the LIFO procedure, stocks are valuated separately for a settlement period. The settlement period is usually a fiscal year or a posting period.
If the stock level at the end of the settlement period is greater than that at the start of the period, a separate valuation layer is created for the difference.
If the stock level at the end of the settlement period is smaller than that at the start of the period, the existing layers are reduced or dissolved, starting with the last layer created.