Kifo procedure (group in - first out)

What does the Kifo process mean?

The Kifo method is a consumption sequence method that is used to simplify the assessment. It can be used to determine the acquisition or Manufacturing costs Similar items of inventory are used in the group or at affiliated group companies.

The Kifo procedure is based on the fiction that inventory items from group deliveries are more likely to leave the warehouse than goods purchased from third parties (group in - first out). According to this, the amounts resulting from group deliveries are set as low as possible in terms of quantity, so that the effort required to eliminate the interim profit is kept to a minimum.

Group deliveries

If the group deliveries are not significantly higher than the group external deliveries and there is no high stock level, the warehouses can consist exclusively of group external deliveries according to the Kifo fiction. This makes it unnecessary to eliminate the interim success with these holdings. However, since the Kifo fiction is only based on quantity, the valuations of the assets must then be determined in the case of deliveries at different prices, for which a further consumption sequence procedure is required.

Kifo method vs. Kilo method

The Kifo procedure differs from the kilo procedure, which assumes that all supplies delivered outside the group leave the warehouse first, so that the part of the stocks consisting of group deliveries is set as high as possible. Since it can be assumed that the group warehouses only contain group deliveries, there is no need to differentiate between group-internal and group-external assets. In contrast to the Kifo process, an elimination of the interim success is nevertheless necessary here.

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