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March 18, 2026The Accounting Review

The Effects of the Thor Power Tool Decision on the LIFO/FIFO Choice.

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Authors

RHRobert HalperinWLWilliam N. Lanen

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Overview

This note examines tax law changes impacting inventory reporting decisions in firms, suggesting shifts between LIFO and FIFO methods.

Key Points

  • The research aims to understand how tax law changes influence firms' inventory accounting methods.
  • Examined the impacts of the Thor Power Tool case on accounting methods used for inventory reporting.
  • Hypothesized that firms would switch to LIFO for tax and financial reporting due to conformity rules.
  • Conducted empirical analyses on firms' inventory method changes during the year 1979.
  • Empirical data supports the hypothesis that firms shifted to LIFO during 1979 for tax reporting.
  • Analysis indicates that the change was largely driven by the implications of tax law.
  • Findings show limited use of LIFO beyond the year 1979.

Cite This Study

Halperin et al. (1987) studied this question.

synapsesocial.com/papers/69ba44154e9516ffd37a5f08https://doi.org/10.2308/tar-4478553
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Also Consider

Synapse has enriched 5 closely related papers on similar clinical questions. Consider them for comparative context:

  1. 1A Comment on "The Effects of the Thor Power Tool Decision on the LIFO/FIFO Choice"1990
  2. 2A Reply to "A Comment on 'The Effects of the Thor Power Tool Decision on the LIFO/FIFO Choice''.1990
  3. 3LIFO Adoption and the Tax Shield Substitution Effect.1996
  4. 4Costs and benefits of the LIFO‐FIFO choice2024 · 2 citations
  5. 5The Effects of LIFO Inventory Costing on Resource Allocation: A Public Policy Perspective.1979