Final answer:
LIFO perpetual inventory calculations are uncommon due to their complexity and the need for continuous cost tracking, so companies often use a LIFO periodic system where costs are calculated at the end of the accounting period.
Step-by-step explanation:
The use of the Last-In, First-Out (LIFO) perpetual inventory system is rare in practice due to its complexity and the requirement for continuous tracking of inventory costs after each transaction. The LIFO method assumes that the most recently acquired items are sold first, which can become exceedingly complicated to manage on a perpetual basis, as this method would necessitate real-time tracking of all inventory costs associated with each sale.
Companies that utilize LIFO often do so in a periodic system rather than a perpetual system. In a LIFO periodic system, the inventory costs are not continuously updated with each sale. Instead, they are calculated at the end of the accounting period, making it more manageable for businesses to handle the complexities associated with the LIFO method. This approach simplifies the inventory management tasks, reduces accounting burden, and is still compliant with regulations where LIFO is permitted.